Updated Apr 30, 2024 - Business

Amazon rides AI, advertising in first quarter earnings beat

Data: Amazon; Chart: Axios Visuals

Amazon on Tuesday reported a blowout first quarter, with its results boosted by cloud computing and advertising activity.

Driving the news: The retail giant posted $143.3 billion in revenue for the first quarter, a 13% increase from a year ago, and well above analyst expectations.

Between the lines: Amazon Web Services (AWS), the company's cloud platform fueled by its AI datacenter business, grew 17% year over year.

  • Advertising services grew 24% over last year due in part to new ads on Prime Video.

Net income increased to $10.4 billion in the quarter, or $0.98 per diluted share, compared with $3.2 billion, or $0.31 per diluted share, a year ago.

What they're saying: "The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS's AI capabilities is reaccelerating AWS's growth rate," CEO Andy Jassy said in a statement.

  • The business is now at a $100 billion annual revenue run rate, he noted.
  • "We think the lion's share of the [customer] cost optimization is behind us," Jassy added on the company's conference call, providing a bullish case for continued growth.

Zoom in: The company touted its delivery performance in the quarter. Nearly 60% of Prime member orders across the top 60 largest U.S. metro areas arrived the same or next day, Amazon notes.

The company forecast revenue growth for the second quarter between 7% and 11% compared to 2023.

  • Operating income is expected to be between $10.0 billion and $14.0 billion for Q2, compared with $7.7 billion in the same period a year ago.
  • Asked on the call about any near-term plans to return cash to shareholders, CFO Brian Olsavsky said they still see ways to generate meaningful returns from invested capital across its businesses, particularly with generative AI.

What's next: The company will hold a conference call with analysts to discuss the results at 5:30pm ET Tuesday.

  • Shares were up nearly 2% in after-hours trading prior to the call.

Editor's note: This story was updated with additional information from the company's conference call.

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