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AWS Drives Amazon with 17% Surge, $25B Revenue

AWS drives Amazon's Q1 revenue with a 17% increase to $25.04 billion, as advertising grows 24%, signaling robust sector recovery.

By Bill Bullington

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4/30, 16:46 EDT
Amazon.com, Inc.
Alphabet Inc.
Meta Platforms, Inc.
Microsoft Corporation
Snap Inc.
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Key Takeaway

  • AWS revenue surged 17% to $25.04 billion, outperforming expectations and contributing 62% of Amazon's total operating income.
  • Amazon invests $4 billion in AI startup Anthropic, signaling a major push into artificial intelligence against rivals like Google and Microsoft.
  • Advertising revenue grew 24% to $11.8 billion, indicating a robust recovery in the digital advertising market.

AWS Revenue Growth Surpasses Expectations

Amazon Web Services (AWS), the cloud computing division of Amazon, reported a significant 17% year-over-year increase in revenue, reaching $25.04 billion in the first quarter. This growth exceeded the expectations of analysts who had forecasted revenue of $24.49 billion, according to surveys by StreetAccount. The acceleration from a 13% increase in the previous quarter underscores AWS's expanding dominance in the cloud sector. AWS now accounts for 17% of Amazon's total revenue, which stood at $143.313 billion for the period. The cloud unit has proven to be a major profit center for Amazon, contributing $9.42 billion in operating income, or about 62% of Amazon's total. This figure surpassed analysts' expectations of $7.52 billion in AWS operating income. Additionally, AWS's operating margin expanded to 37.6%, marking the widest margin reported since at least 2014.

Amazon's Strategic Investments in AI

In a strategic move to bolster its position in the artificial intelligence (AI) technology race, Amazon announced a $4 billion investment in AI startup Anthropic during the quarter. Anthropic is known for leveraging AWS chips for training AI models and has been acknowledged by AWS CEO Adam Selipsky as offering some of the "leading models in the market right now" in certain areas. This investment highlights Amazon's commitment to advancing AI technologies, positioning itself against tech giants like Google and Microsoft, who have also made significant investments in AI through partnerships with Anthropic and OpenAI, respectively.

Advertising Revenue Shows Robust Growth

Amazon's advertising unit witnessed a 24% growth in the first quarter, with revenue increasing to $11.8 billion from $9.5 billion a year earlier. This growth exceeded the expectations of analysts who had projected $11.7 billion for the quarter, indicating a strong rebound in the digital advertising market. The recovery in the advertising sector aligns with broader industry trends, as other major digital advertising companies like Meta, Alphabet, and Snap also reported better-than-expected revenue growth. Amazon's total revenue for the period was $143.3 billion, up 13% from the previous year, highlighting the company's increasing reliance on its advertising business for growth and profit as it seeks to diversify beyond its core online retail and cloud computing services.

Management Quotes

  • Andy Jassy, CEO of Amazon:

    "Demand for Amazon’s cloud computing services, including its generative artificial intelligence products, was boosting AWS’s growth, which he said was 'now at a $100bn annual revenue run rate.'"

  • Swami Sivasubramanian, Vice-President for Data and Machine Learning at AWS:

    "Amazon was not facing the same constraints [as Microsoft], adding that it was 'rapidly scaling our capabilities'."