Amazon’s Empire Grew by $13 Billion in Q2 – WWD

After a string of disappointing quarters, Amazon appeared to be finally turning things around last quarter. Now its cup runneth over, as second-quarter earnings results on Thursday toppled estimates and painted a rosy outlook for the third quarter.

The e-commerce giant filed net income of $6.7 billion, with earnings per share of 65 cents sailing over the 35 cents expected, on net sales of $134.4 billion. Analysts had projected $131.6 billion.

According to the company, this revenue growth amounted to 11 percent year-over-year, compared to the $121.2 billion during the same period in 2022. At the time, the company took a markdown on its investment in electric vehicle company Rivian.

Revenue for its advertising and cloud businesses also beat estimates, with its ad haul of $10.7 billion edging out the $10.4 billion expected, and Amazon Web Services charting $22.1 billion, pushing past estimates of $21.8 billion.

Ads are a growing priority at Amazon, and it’s easy to see why. Revenue may have only barely beaten the estimates but in reality the figure marks soaring growth of 22 percent. Experts can’t resist comparing that to Google and Meta, whose ad revenues also grew, but by 3.2 percent and 12 percent, respectively.

Altogether, the numbers make for Amazon’s best quarter since late 2020, and the company’s not done yet. In the third quarter, it expects sales will crank up even further. Analysts project third-quarter revenue of $138.25 billion, but hitting that threshold would just mark the low end of the company’s $138 billion to $143 billion forecast, which would amount to growth of 9 to 13 percent. The stock shot up nearly 7 percent in after-hours trading on the news.

The business’ comeback mode began in earnest in the first quarter, thanks in large part to serious cost-cutting maneuvers, and the momentum is continuing, thanks in part to AWS bouncing back, according to chief executive officer Andy Jassy. The cloud division saw slowing growth in the first quarter, apparently suppressed by economic uncertainty, but now appears to have found its footing. This matters, because of the impact of AWS on the company’s bottom line, representing some 70 percent of its $7.7 billion in operating profit.

In the announcement, Jassy explained that the business unit’s growth has stabilized, because “customers started shifting from cost optimization to new workload deployment.”

The nature of that workload is meaningful, and not just to Amazon. Cloud providers are often where outside partners engage with artificial intelligence and machine learning technology. As tech’s darling of late, AI has kicked up a flurry of interest and activity from Silicon Valley giants.

According to Amazon, AI made available through AWS is reaching some of the world’s top health care, utility and financial organizations, and it plans to deepen its investments in generative AI. The division plans to invest $100 million in a program, called the AWS Generative AI Innovation Center, so companies can build and deploy their own generative solutions.

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