Amazon beats expectations in first quarter earnings as shares jump 11%

Amazon shares jumped more than 11%, as income from its cloud computing and advertising units beat estimates for the first quarter of the year.

The e-commerce behemoth, which is in the midst of aggressively cutting costs including laying-off 27,000 workers, said revenue for the quarter was $127.4bn, a 9% growth compared with the $116.4bn it reported during the same period last year.

Profits at the Seattle-based company were reported at $3.17bn, or 31 cents per share, but higher than the $2.24bn industry analysts had expected.

Despite coming in ahead of expectations, Amazon said that its AWS cloud unit, which pioneered the market over 15 years ago and maintains a commanding lead over other tech firms, grew by 16% during the first quarter, much slower than the 37% the company reported a year earlier.

Overall, Amazon’s results are a strong improvement over a year earlier, and followed upbeat earnings by Facebook parent’s company Meta, as well as Microsoft. Before Thursday’s results, Amazon shares are up 31% for the year after nearly half their value in 2022.

Amazon’s CEO, Andy Jassy, said in a statement that “there’s a lot to like about how our teams are delivering for customers, particularly amidst an uncertain economy”.

Amazon’s advertising business, which saw revenues jump 23% year-over-year to $9.51bn, had benefited from the company’s investments in machine learning, Jassy said. While business customers are spending “more cautiously” on cloud services, he added, Amazon’s storage and machine learning services, would provide “much growth ahead”.

Earlier this month, the company warned that shoppers have become more conscious about their spending and are trying to save costs when they can. On top of that, many shoppers have returned to in-store shopping after relying on e-commerce during the pandemic. As a result, the company reported no growth in its online retail business.

Amazon has already responded to the post-pandemic environment by cancelling some warehouse expansion plans. Cost-saving measures have increased over the past two quarters with layoffs in corporate positions, including devices, advertising, AWS and live-streaming, reaching 27,000, the largest job cuts in its 29-year history.

The company also plans to pause construction on the second phase of its headquarters in northern Virginia and will close some of its Amazon Fresh and Go convenience stores and pause grocery business expansions.

But the company has also said it plans to expand into other areas, including healthcare, generative AI and Kuiper, a satellite broadband project the company unveiled in 2020.