Amazon’s quarterly revenues have witnessed a remarkable surge, driven by what CEO Andy Jassy describes as a “once in a lifetime opportunity” in generative artificial intelligence, coupled with robust advertising demand. The tech giant’s shares responded positively in after-hours trading on Thursday.
The scramble for generative AI development has created an unprecedented demand for cloud storage capacity. Amazon Web Services (AWS), the company’s vital profit generator, reported sales of $27.5bn, marking a 19% year-on-year increase. The cloud division’s AI business, while not specifically detailed, is experiencing “triple digit” revenue growth according to Jassy.
The AI boom has necessitated substantial capital expenditure, with Amazon investing £22.6bn in property and equipment during the quarter, nearly doubling from £12.5bn in the previous year. The company projects annual spending of £75bn, with higher figures anticipated for the following year.
The Seattle-based organisation’s overall revenues climbed 11% year-on-year to £159bn, exceeding analyst expectations. The forecast for the upcoming holiday quarter suggests net sales between £181.5bn and £188.5bn, aligning with market predictions of £186.4bn.
Amazon’s advertising business demonstrated remarkable resilience, with revenue jumping 19% to £14.3bn. The company’s net income of £15.3bn significantly outperformed analyst estimates of £12.2bn, representing a 50% increase from the previous year.
The tech giant’s market valuation is poised to surpass £2tn, with shares rising 6% in after-hours trading. This growth trajectory reflects Amazon’s strategic positioning in the AI market, competing against fellow tech behemoths Meta, Microsoft, and Alphabet in what industry experts are calling “cloud 2.0”.
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