Despite positive earnings, investors are watching mounting investments in AI
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Amazon has reported better-than-expected quarterly figures, mainly thanks to strong performances from its cloud division AWS. Revenue and profit both came in above analysts’ forecasts, underlining once again that cloud and AI are key growth drivers for the company.
The cloud arm (AWS) delivered solid growth, driven by rising demand for AI applications and digital infrastructure. Companies are investing ever more in cloud capacity, which plays into Amazon’s hands.
Revenue at Amazon Web Services (AWS) rose in the first quarter by 28% to $37.6 billion, compared with analysts’ average estimate of a 25.08% increase to $36.61 billion.
Amazon posted 17% higher revenue of $181.5 billion in the past quarter. Net profit of $30.3 billion was far above the $17.1 billion recorded a year earlier.
Alongside cloud, other divisions also contributed to the results, but AWS remains crucial because of its high margins and strategic role within AI. Demand for computing power and data storage continues to rise, and Amazon is therefore investing heavily in expanding its infrastructure.
At the same time, investors are scrutinising the mounting investments, particularly in AI. These may weigh on profitability in the short term, but are meant to deliver growth over the longer term.
Harping on
In recent days Amazon has signed a multi-year deal with Oprah Winfrey’s Harpo Entertainment. As a result, Amazon’s podcast division Wondery will gain exclusive distribution and advertising rights for The Oprah Podcast in both audio and video formats.
The podcast features Winfrey’s interviews with well-known figures and ordinary people on topics such as relationships and financial health. Past guests have included Serena Williams, Hugh Jackman, Ina Garten and Adam Grant.
Podcasts have become an important growth area for media and technology companies, as listeners and advertisers increasingly opt for on-demand audio and video. Through Wondery, Amazon has been investing in podcasts for some time in order to compete with rivals such as Spotify and YouTube.
Under the agreement, the show will expand from this summer to two new episodes per week. From July, Wondery will distribute the podcast via Amazon services including Prime Video and Amazon Music. The show will also remain available on YouTube and other podcast platforms.
There was more Amazon news this week. An Atlas V rocket operated by United Launch Alliance (ULA) successfully launched 29 new Internet satellites for Amazon on Monday evening. The rocket lifted off from Cape Canaveral Space Force Station in Florida.
The mission, called Amazon Leo 6, is the sixth ULA flight in the build-out of Amazon’s low-Earth-orbit broadband network. That network was previously known as Project Kuiper and is ultimately meant to comprise more than 3,200 satellites. The system is intended as a rival to SpaceX’s Starlink.
This launch further increased the total number of operational Amazon satellites in orbit. Prior to this flight, nine operational missions had already taken place using rockets from ULA, SpaceX and Arianespace.
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