Amazon on Wednesday posted better-than-expected earnings and revenue for the first quarter, and reported cloud sales that exceeded analysts’ expectations.
The stock rose more than 4%, after bouncing in extended trading.
Here’s how the company fared, compared to ratings from analysts polled by LSEG:
- Earnings per share: $2.78 vs. $1.64
- Net worth: $181.52 billion versus $177.30 billion
Wall Street also looked at other key revenue numbers:
- Amazon Web Services: $37.59 billion versus $36.64 billion, according to StreetAccount
- Advertising: $17.24 billion versus $16.87 billion, according to StreetAccount
Revenue in Amazon’s cloud division rose 28% year over year to $37.59 billion, marking its fastest growth in more than three years. Wall Street had expected AWS sales to grow 26%.
Amazon and other major technology companies have been trying to justify their massive use of artificial intelligence, which could reach 700 billion by 2026. Amazon in February predicted that its capital expenditures will reach $200 billion by 2026, which is a sharp increase from the previous year.
The company recently announced a number of AI-related deals with OpenAI, Anthropic and Metawhich could help ease investor concerns about when its use will bring returns, but also suggests Amazon will need to build more data centers and infrastructure to meet growing demand.
Amazon CEO Andy Jassy also looked to highlight the company’s home chip business as a beneficiary of the AI boom, and the company called the share close to its earnings release.
“We’re in the midst of one of the biggest changes of our lives, we’re in a great position to lead, and I’m very optimistic about what’s going to happen for our customers and Amazon,” Jassy said in a statement.
Amazon said property and equipment expenses in the first quarter totaled $44.2 billion, which was higher than Wall Street’s estimate of $43.6 billion, according to FactSet. Meanwhile, its trailing-twelve-month free traffic fell to $1.2 billion, a 95% year-over-year decline, largely due to its AI investments, the company said.
The company’s capex spending also increased due to its investment in a new internet service from space, called Leo. Amazon aims to begin commercial operations in the third quarter of this year, Chief Financial Officer Brian Olsavsky said in a call with investors.
Amazon needs to build enough satellites and book more rocket launches to build its constellation, which will eventually include about 7,700 satellites. About 270 satellites are currently operational.
Earlier this month, Amazon announced that it plans to buy Globalstar for an estimated $11.57 billion, the second largest acquisition in its history.
“They have the extraordinary and rare global reach needed to deliver directly to the device,” Jassy said on the conference call, referring to Globalstar. “We’re also very interested in the satellite information we’re going to get as part of that integration.”
The deal also “provides an opportunity to build a deeper relationship with Apple,” Jassy said. As part of the agreement, an applewhich has a 20% stake in Globalstar, will use Amazon’s satellite connection for other products.
For the current quarter, Amazon said it expects sales to come in between $194 billion and $199 billion. Analysts polled by LSEG had expected $188.9 billion.
The company said second-quarter operating income is expected to be between $20 billion and $24 billion. Analysts were projecting $22.65 billion, according to StreetAccount.
Revenue at its online stores segment, which still accounts for the largest share of Amazon’s total sales, grew 12% in the first quarter to $64.3 billion, higher than analysts’ estimate of $62.7 billion.
Alongside its earnings release, the company announced that this year’s Prime Day discount bonanza will be held in June, a month earlier than usual.
Advertising revenue jumped 24% year over year to $17.24 billion, beating Wall Street expectations of 21.2% growth. The unit is one of the company’s fastest-growing and most profitable businesses, and most of its revenue comes from listing sponsored products on its e-commerce site.
Amazon’s head count has decreased by 1,000 workers since the fourth quarter. It ended the first quarter with 1.57 million employees worldwide, which was almost flat from last year.
The company announced earlier in the first quarter that it would lay off 16,000 jobs, after cutting 14,000 jobs in October.
WATCH: Amazon needs to spend more to keep AWS as the premier AI player
