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The growth rate in AWS sales, up from 17% in the previous quarter, signals continued momentum in the sector
Amazon reported strong earnings for the quarter ending June 30, 2024, with net sales rising 10% to $148 billion. However, this fell slightly short of analysts’ expectations of $148.6 billion. The company’s net income saw a significant increase, reaching $13.5 billion, surpassing the anticipated $11 billion.
A key driver behind Amazon's performance was its cloud computing division, AWS, which posted a 19% increase in sales to $26.3 billion, slightly exceeding projections. The growth rate in AWS sales, up from 17% in the previous quarter, signals continued momentum in the sector. Despite these gains, investor concerns have surfaced due to a sharp rise in capital expenditures, which jumped 50% year-over-year to $17.6 billion. This increase is largely attributed to investments in AI infrastructure, including data centers and specialized chips, as Amazon positions itself in the competitive AI space. Amazon CFO Brian Olsavsky indicated that capital spending is expected to rise further in the second half of 2024, particularly in cloud infrastructure and AI development. While Amazon has not disclosed specific AI revenue figures, the company has noted substantial growth in this area, describing it as a “multibillion-dollar revenue run-rate business.”
The company’s advertising segment also saw robust growth, with sales increasing by nearly 20% to $12.8 billion. However, operating margins slightly contracted to 10% from 11% in the previous quarter, reflecting the challenges of balancing investment with profitability. Following the report, Amazon's shares fell by 8% in after-hours trading, as investors weighed the risks of the company’s aggressive AI investments against its current financial performance.
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