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| Amazon beats Wall Street expectations with strong cloud business growth | Amazon beats Wall Street expectations with strong cloud business growth |
| (about 20 hours later) | |
| Shares rise as company reports quarterly revenue of $158.9bn – more than analysts had forecast | Shares rise as company reports quarterly revenue of $158.9bn – more than analysts had forecast |
| Amazon became the latest of the “magnificent seven” tech giants to report quarterly earnings on Thursday, with all eyes once again on cloud computing and any sign of a return on vast AI investments. Shares in the e-commerce giant rose in after-hours trading. | Amazon became the latest of the “magnificent seven” tech giants to report quarterly earnings on Thursday, with all eyes once again on cloud computing and any sign of a return on vast AI investments. Shares in the e-commerce giant rose in after-hours trading. |
| The company reported revenue of $158.9bn against analyst expectations of $157.2bn, and earnings per share of $1.43, compared to $1.16 expected by Bloomberg analysts. | The company reported revenue of $158.9bn against analyst expectations of $157.2bn, and earnings per share of $1.43, compared to $1.16 expected by Bloomberg analysts. |
| Amazon reported $27.5bn for the previous three months, a 19% increase, in line with analysts’ expectations from the cloud computing business. | Amazon reported $27.5bn for the previous three months, a 19% increase, in line with analysts’ expectations from the cloud computing business. |
| The pace of growth is faster than the company reported last year, a positive sign for Wall Street. Its advertising business also brought in as much revenue as analysts expected. In August, the company reported that its Amazon Web Services division pulled in $26bn in revenue compared to $22bn for the same period in 2023. | The pace of growth is faster than the company reported last year, a positive sign for Wall Street. Its advertising business also brought in as much revenue as analysts expected. In August, the company reported that its Amazon Web Services division pulled in $26bn in revenue compared to $22bn for the same period in 2023. |
| A day earlier Microsoft reported significant growth in its cloud computing division, but that failed to satisfy investors. Shares in the company dropped more than 5% on Thursday. Google reported 33% growth in its cloud business, which led to a modest increase in its stock price. | A day earlier Microsoft reported significant growth in its cloud computing division, but that failed to satisfy investors. Shares in the company dropped more than 5% on Thursday. Google reported 33% growth in its cloud business, which led to a modest increase in its stock price. |
| “Investors need to see the monetization of AI spreading to the rest of the tech landscape,” Dan Ives, a Wedbush analyst, said this week. “The next few weeks will be the linchpin to confirmation that the AI ‘use case phase’ have now begun within the enterprise world.” | “Investors need to see the monetization of AI spreading to the rest of the tech landscape,” Dan Ives, a Wedbush analyst, said this week. “The next few weeks will be the linchpin to confirmation that the AI ‘use case phase’ have now begun within the enterprise world.” |
| Amazon executives have previously said its AI business has an annualized revenue run rate of $105bn. | |
| Investors are also watching Amazon’s traditional business – online retail – for signs that consumers are continuing to respond to an optimistic US economic environment. | Investors are also watching Amazon’s traditional business – online retail – for signs that consumers are continuing to respond to an optimistic US economic environment. |
| “Amazon is experiencing strong growth throughout 2024, with momentum for both its core retail business and its efforts to diversify its portfolio,” said Greg Zakowicz, senior e-commerce expert at Omnisend. | “Amazon is experiencing strong growth throughout 2024, with momentum for both its core retail business and its efforts to diversify its portfolio,” said Greg Zakowicz, senior e-commerce expert at Omnisend. |
| “The cost of living crisis has eased for some consumers this year, freeing up disposable income and allowing Amazon to get more cut-through with shopping events like Prime Day or Black Friday than they did last year,” Zakowicz said. | |
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| Investors are also looking at Amazon’s effort to rival Elon Musk’s space-based Internet service, known as Project Kuiper, that plans to place 3,236 satellites into low Earth orbit and then to provide global broadband access. | Investors are also looking at Amazon’s effort to rival Elon Musk’s space-based Internet service, known as Project Kuiper, that plans to place 3,236 satellites into low Earth orbit and then to provide global broadband access. |
| Industry watchers were hoping to see gains in Amazon’s advertising business. Analysts have warned that deceleration in ad sales coupled with slower-than-expected rollout of ad on Amazon’s Prime Video service could pose risks. | Industry watchers were hoping to see gains in Amazon’s advertising business. Analysts have warned that deceleration in ad sales coupled with slower-than-expected rollout of ad on Amazon’s Prime Video service could pose risks. |
| This article was amended on 1 November 2024. Amazon Web Services stated it had an annualized revenue run rate of $105bn, not that it was on track to generate $105bn. |