Amazon Q1 Profit Grows Despite Cloud Unit Concerns

by Joshua Brown
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Amazon made a lot more money than people were expecting them to during the first quarter. After getting this news, their stock prices went up in the evening when trading took place. Despite that, some people felt worried because Amazon’s most profitable business, cloud computing (AWS) seemed to be slowing down.

Amazon, a company located in Seattle, reported that they earned $127.4 billion in revenue during the three months of January-March. This is 9% more than the amount they made last year of $116.4 billion. People who analyze these kinds of numbers had predicted Amazon would earn $124.6 billion, so they ended up beating their expectations.

The e-commerce giant earned a total of $3.2 billion in profits which is more than the $2.24 billion that industry analysts had predicted. This profit amount is significantly higher compared to the amount earned last year when it reported its first quarterly loss in years due to losses from investments made in an electric vehicle company called Rivian Automotive.

At first, investors were happy and Amazon’s stock prices went up by 10%. However, after company employees talked with the investors and mentioned that they still have some issues with AWS, the stock prices dropped by 2%.

This week was a busy one in terms of big tech companies’ earnings. On Wednesday, Facebook’s stock prices went up in after-hours trading due to them exceeding their predicted profit and income numbers. Microsoft had higher profits than usual on Tuesday as its cloud segment Azure saw an increase despite experiencing some slowdowns before. Google’s cloud business also did well by going up 28%, giving the company its first ever operating profit – however, this growth was slower compared to last year’s results.

– Amazon CEO Andy Jassy wrote in a report released early this month that AWS, the leader in the cloud industry, is experiencing issues due to companies being more careful about how much money they spend because of increased economic uncertainty.

– The company said on Thursday that their division grew by 16% during the first quarter which was better than what analysts predicted but still lower than last year’s 37% growth rate.

Andrew Lipsman, a principal analyst from Insider Intelligence, commented that Amazon did something very important in the first quarter of this year. The result was might have either reversed or slowed down the troubling decrease in their growth. He stated that Amazon may finally be starting to gain some momentum again.

Amazon reported that their online shopping business didn’t grow as much this quarter. Even when accounting for money exchange rates, the growth was still pretty small – just 3%. The company’s executives said people have become more careful with how they’re spending their money, and not buying as many things online as they did in the past. This is why Amazon hasn’t seen the same level of revenue like before.

On Thursday, Amazon’s Chief Financial Officer Brian Olsavsky said people are being really careful with their money because prices have gone up a lot. This means they want to buy cheaper things to save money.

However, there are still some good spots; international sales are better due to the economy in Europe getting better over time and Amazon’s advertising businesses as well as other parts of the company doing really well.

Amazon recently started to “tighten their purse strings” by cutting back on things like expanding its warehouses and hiring new people. This is because online sales have slowed down, and there are worries that the U.S.’s economy might get worse. In addition, they moved their warehouses from being located all over the country to being closer together in certain regions. This makes it easier for them to deliver products faster and save money at the same time.

Recently, Amazon has been cutting back and becoming more economical. To do this, they have got rid of 27,000 jobs from various parts of the company, including gadgets, advertising, AWS, and Twitch. They also no longer use some services that weren’t profitable enough for them – like Amazon Care healthcare startup, fabric.com and the video device called Amazon Glow. On Wednesday, they announced that their health-linked Halo devices and its related membership would be shut down starting August 1st!

In February, Amazon said they will close down some of their Amazon Fresh and Go stores, and delay expanding the business. They are also postponing plans on building their second headquarters in northern Virginia. It is expected to open in June with thousands of jobs which they asked for $152.7 million dollars from Virginia to help employ those people.

Jassy has told us that Amazon will be working on controlling and lowering their costs. He also mentioned that they are going to invest more into other things like healthcare, Artificial Intelligence, and even a satellite broadband project called Kuiper which was announced in 2020.

Amazon also said that they predict profits between $127 billion and $133 billion for the second quarter of this year, which is about around the same amount as predicted by experts ($129.87 billion).

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