Amazon announced that its delivery speeds had increased again at the start of the year (AFP/Archives/Patrick T. Fallon)
Amazon saw its revenue and net profit grow beyond market expectations in the first quarter, thanks in part to its cloud arm, AWS, which capitalizes on businesses’ appetite for remote computing services and artificial intelligence (AI).
Its turnover climbed 13% over one year, to 143.3 billion dollars, and its net profit stood at 10.4 billion, more than triple the same period last year, according to a press release published Tuesday.
“The determination of companies to modernize their (IT) infrastructures and the attraction of AWS AI services are re-accelerating the growth rate” of the cloud subsidiary, declared Andy Jassy, the boss of Amazon, quoted in the document.
He added that the sales platform had also contributed to the group’s performance during the first three months of the year, thanks to him “low prices” and “delivery speeds”.
Amazon’s main activity, e-commerce, “regained shape at the end of 2023”, also noted Blake Droesch, of Emarketer.
“The company continues to reap the benefits of its fulfillment center regionalization strategy, with ever-faster deliveries delighting customers.”
“This allows it to remain competitive in the face of new threats represented by Temu and Shein”, the Chinese sales platforms at discounted prices, added the analyst.
– Accelerated growth of the cloud –
The Seattle group has just announced that its delivery speeds have increased further at the start of the year.
“In March, nearly 60% of orders placed via Prime (paid subscription to Amazon services) arrived the same day or the next day in the 60 largest American cities,” Amazon said in a statement Monday.
But the market was especially watching for growth in the cloud, which represents the majority of the group’s profits, and which the new wave of AI is disrupting.
Adam Selipsky, boss of AWS, in Las Vegas, November 28, 2023 (GETTY IMAGES NORTH AMERICA/AFP/Archives/Noah Berger)
In the first quarter, AWS, Amazon’s remote computing branch, generated $25 billion in revenue, up 17%, of which it generated $9.4 billion in operating profit, a key indicator of profitability.
The acceleration of AWS’s growth pleased Wall Street, which did not expect so much. Amazon’s stock rose more than 2% in electronic trading after the stock market closed.
Microsoft and Google, Amazon’s two main rivals in the cloud, already delighted the market on Thursday with better-than-expected profits and strong growth in remote computing.
Above all, they reassured investors of their ability to generate income from their massive investments in AI.
– Delay in AI? –
The two tech giants are leading the race for generative AI, which makes it possible to produce all kinds of content (text, images, etc.) upon simple query in everyday language.
This technology, which has been rocking Silicon Valley since the end of 2022, requires cutting-edge chips, high-tech servers, a lot of computing power and qualified personnel to train the foundation models, on which companies build productivity tools and assistants. AI (like ChatGPT).
Last Wednesday, Meta (Facebook, Instagram) disappointed Wall Street by announcing higher spending on AI, which will take several years to turn into profits.
Amazon, more discreet than its competitors, has also gone all out in generative AI, by entering into contracts with start-ups and developing its own chips.
Its Bedrock platform provides customers with several different models, including those from Anthropic (a rival of OpenAI), Meta or the French company Mistral.
Adam Selipsky, head of AWS, assured AFP this month that Amazon is not behind. “There’s not going to be one (generative AI) model that’s going to rule over all the others,” he said.
Generative AI “will generate tens of billions of dollars in revenue for Amazon over the next few years,” Andy Jassy promised in February.
© 2024 AFP
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