Amazon stocks surge after Q1 revenue, profit wins

NEW YORK, NY (AP) - Amazon reported a continued slowdown of its cloud computing unit AWS on Thursday but higher than expected revenue for the first quarter and profits sent its shares higher in after hours trading.

Seattle-based company reported $127.4 Billion in revenue for January-March, an increase of 9% compared to $116.4 Billion it reported in the same period last. FactSet surveyed analysts who expected $124.6 billion.

Analysts had predicted $2.24 billion in profits. The actual profit was $3.2 billion or 31 cents a share. This is also a significant improvement over the same period in last year when the ecommerce giant reported its largest quarterly loss for years, primarily due to a decline in the value of its investment into the electric vehicle company Rivian Automobile.

Amazon's stock grew 9% after-hours.

The earnings report for Thursday concludes a busy week of earnings reports from major tech companies. After-hours stock trading saw a surge in Meta's shares after its parent company, Facebook, beat revenue and profit expectations on Wednesday. Microsoft's Tuesday profits were boosted by the strong performance of its cloud segment Azure. This segment has recently seen a slowdown in growth. Google's cloud business has grown by 28% and led to the company's first operating profit. It grew slower than the same time last year.

Andy Jassy, CEO of Amazon, wrote in his letter to shareholders released earlier this month, that AWS was facing a short-term downturn as companies were becoming more cautious with their spending due to the uncertainty in the economic climate. The company reported that the segment had grown 16% in the first quarter. This was a better showing than analysts expected, but a slower rate of growth compared to the 37% recorded a year ago.

Executives from companies have said that shoppers are also more aware of their spending, and they try to cut costs whenever possible. Amazon reported record sales figures in the past because many consumers had ceased to rely on ecommerce due to the pandemic.

Amazon's online retail business reported no growth for the first quarter. It increased by 3%, excluding the effects of foreign exchange rates.

Amazon has also cut its expenses due to a slowdown in online sales, and fears that the U.S. could enter a recession.

Last year, the company started cutting its costs by cancelling some warehouse expansion plans and by reducing its headcount at its facilities. In the last two quarters, it has accelerated its cost-savings measures by cutting 27,000 corporate positions in various units including devices, AWS, Twitch and advertising. The company has also shut down several businesses which were not generating enough revenue, including its healthcare startup Amazon Care and subsidiary fabric.com, as well as the video calling device Amazon Glow. The company announced on Wednesday that it would close its Halo health-focused devices and membership service by August 1.

In February, Amazon announced that it would close some of its Amazon Fresh and Go convenience stores and stop expansions in order to try and find the best formula for its grocery business. Amazon has also stopped construction of the second phase in its northern Virginia headquarters. The company expects thousands of jobs in the first phase when it opens its doors in June. It has requested $152.7 million from the state to help bring these jobs to Virginia.

Jassy expressed confidence in the ability of the company to control its costs. Amazon is also expanding its investment in areas outside its core business. These include healthcare, generative artificial intelligence, and Kuiper, the satellite broadband project that was announced in 2020.