Amazon surpasses expectations in quarterly results driven by AI interest: Report

Amazon has outperformed analysts' expectations in its quarterly earnings report released on Tuesday, maintained by the growing interest in artificial intelligence (AI) and strong cloud-computing growth.

CEO Andy Jassy highlighted the opportunity Amazon sees in serving AI customers, highlighting the company's strategic focus on leveraging AI technologies to enhance its offerings.

While the quarterly results exceeded Wall Street's estimates, Amazon's stock experienced an increase of less than 2 per cent in extended trading, following a below-expectation revenue forecast for the current quarter.

Chief Financial Officer Brian Olsavsky indicated that capital spending would increase throughout the year, with a focus on strengthening Amazon Web Services (AWS) infrastructure and expanding generative AI efforts.

Amazon reported a 13 per cent increase in first-quarter sales, reaching $143.3 billion, surpassing the average analyst estimate.

Moreover, the company's net income more than tripled to $10.4 billion in the same period.

However, the revenue forecast for the current quarter fell short of analyst consensus, with Amazon expecting revenue between $144.0 billion to $149.0 billion.

AWS, the leading provider of cloud-computing services, recorded a 17 per cent rise in revenue to $25.0 billion for the first quarter, exceeding expectations.

Despite this growth, AWS faces stiff competition from rivals like Microsoft and Alphabet, which reported higher revenue growth rates in cloud-computing services for the same period.

The prominence of AI in the tech industry has surged since the debut of OpenAI's ChatGPT, sparking major investments and developments in AI-driven features.

Amazon's introduction of its "Q" chatbot for businesses and the Rufus service to aid customers in finding products on its website are a few efforts made to integrate AI across its platforms.

CEO Andy Jassy stated that AWS is on track to achieve $100 billion in annual sales, reflecting the continued expansion and dominance of Amazon's cloud-computing division.

Despite these positive indicators, Amazon chose not to announce a dividend, deviating from the trend observed among its Big Tech counterparts, including Alphabet and Meta Platforms.

Amazon's advertising business also contributed to its quarterly results, with ad sales coming to $11.8 billion, a 24 per cent increase from the previous year.

The company's introduction of unskippable ads on its Prime Video streaming service has garnered enthusiasm from marketers, offering an additional revenue stream for Amazon.

Although there are fluctuations in its workforce numbers, Amazon ended the quarter with 1.52 million employees, indicating ongoing adjustments within the company's organisational structure.

(With inputs from Reuters)