Amazon’s second-quarter net profit doubles to $13.5 billion thanks to cloud and AI

2024-08-01 21:44:16

However, the online commerce giant’s top line was disappointing compared with slightly higher analyst forecasts.

Amazon’s second-quarter net profit doubled to $13.5 billion, far better than expected, thanks largely to its cloud business (remote computing) that benefits from artificial intelligence (AI) generation.

However, the online commerce giant’s revenue of $148 billion (up 10% in a year) was slightly higher than analysts’ forecasts, but disappointing. Amazon shares fell more than 5% in electronic trading after the close of the New York Stock Exchange on Thursday.

Net profit 13.5 billion

Net income reached $13.5 billion, double that of a year ago, thanks to strong profits in its cloud (remote computing) business. Amazon shares fell more than 5% in electronic trading after the close of the New York Stock Exchange on Thursday. “We continue to make progress in many areas, particularly the continued acceleration of AWS growth”Andy Jassy, ​​boss of Amazon’s cloud business group, was quoted in the earnings press release.

AWS revenue grew 19% to $26.3 billion, and the unit made $9.3 billion in operating profit (a key indicator of profitability), accounting for two-thirds of the group’s total profit of $14.7 billion. Despite being the world’s No. 1 in the cloud, Amazon lags behind the field’s other two giants, Microsoft and Google, in generating artificial intelligence. The two companies are leading in the design of models and applications that can generate text, images and other content in response to simple queries in everyday language.

Cloud Foodie

The cloud is essential for businesses and individuals to deploy these tools, requiring massive investments in new, temporary data centers that are increasingly energy intensive. But these staggering expenses worry shareholders, who are eager to see a quick return on their business. In April, Amazon warned that it would increase its investments, primarily in AWS and generative AI, on top of the $14 billion it had already spent in the first quarter.

But technology “Already represents billions of dollars in annual revenue”Andy Jassy assured. “AWS’ strategic investments in artificial intelligence to defend its lead over Microsoft and Google in the cloud space were well received by the market”Emarkerter’s Sky Canaves estimates. Some analysts believe that Microsoft, the king of the AI ​​revolution, underperformed on Tuesday despite better-than-expected revenue and profit, with its cloud quarterly sales growing 29% year-on-year, below expectations of 31%.

Wall Street was slightly relieved when boss Satya Nadella singled out Azure AI, which now has 60,000 customers, and its cloud platform for generative AI services, which is 60% up from a year ago. Google also had everything going for it, but YouTube revenue came in below expectations. Only Meta (Facebook, Instagram) did perform well on Wednesday, thanks to its targeted ad sales, which have become more attractive thanks to AI.

The social media giant’s second-quarter net profit soared 73% year-on-year to $13.5 billion.

Core Business

“If a company demonstrates strong performance in its core business, its investments in AI will be viewed more positively”commented Debra Aho Williamson of Sonata Insights. “But if the core business shows signs of weakness, as we saw last week, Youtube, This approach may seem riskier.” Amazon’s core e-commerce platform revenue in North America grew 9% to $90 billion, with operating profit of $5 billion.

The company continues to be popular, not least thanks to its super-fast delivery times. But it is threatened by Chinese discount sales platforms Temu and Shein. According to CNBC, the group is considering launching a new section on its platform dedicated to selling low-cost fashion and other cheap products made in China, allowing Chinese merchants to sell products directly to American consumers.

1722549526
#Amazons #secondquarter #net #profit #doubles #billion #cloud