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AWS Revenue Up 17%, Drives Amazon's Profit Surge

AWS revenue grows 17% to $25.04 billion, outpacing expectations and marking an acceleration in Amazon's cloud sector growth.

By Alex P. Chase

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4/30, 16:33 EDT
Amazon.com, Inc.
Alphabet Inc.
Meta Platforms, Inc.
Snap Inc.
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Key Takeaway

  • AWS's revenue surged to $25.04 billion, a 17% increase, outperforming expectations and contributing 62% of Amazon's total operating income.
  • Amazon invests $4 billion in AI startup Anthropic, highlighting its focus on leading the AI technology race against Google and Microsoft.
  • Advertising revenue jumps 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 arm of Amazon, reported a 17% year-over-year revenue growth in the first quarter, reaching $25.04 billion. This performance exceeded Wall Street's expectations, which had forecasted revenue of $24.49 billion according to analysts surveyed by StreetAccount. The growth rate marked an acceleration from the 13% increase reported in the fourth quarter, highlighting AWS's expanding influence in the cloud sector. AWS now represents 17% of Amazon's total revenue, which amounted to $143,313 billion for the period. The cloud unit continues to be a significant profit center for Amazon, contributing $9.42 billion in operating income, or approximately 62% of Amazon's total. This figure surpassed analysts' expectations of $7.52 billion in AWS operating income. Furthermore, AWS's operating margin expanded to 37.6%, the widest margin reported since at least 2014.

Amazon's Strategic Investments in AI

During the quarter, Amazon announced a $4 billion investment in AI startup Anthropic, emphasizing its commitment to advancing artificial intelligence technologies. Anthropic, known for utilizing AWS chips for training AI models, has been recognized by AWS CEO Adam Selipsky as offering some of the "leading models in the market right now" in certain areas. This move underscores Amazon's strategy to remain at the forefront of AI development, competing with other tech giants like Google and Microsoft, both of which have also made significant investments in AI through partnerships with Anthropic and OpenAI, respectively.

Advertising Revenue Shows Robust Growth

Amazon's advertising unit reported a 24% growth in the first quarter, with revenue climbing to $11.8 billion from $9.5 billion a year earlier. This growth exceeded analysts' expectations of $11.7 billion for the quarter and signals a strong rebound in the digital advertising market. The advertising sector's recovery is part of a broader trend observed across the industry, with other major digital advertising companies like Meta, Alphabet, and Snap also reporting better-than-expected revenue growth. Amazon's total revenue for the period was $143.3 billion, up 13% from the previous year, with the company increasingly relying on its advertising business for growth and profit as it seeks to diversify beyond its core online retail and cloud computing services.

Management Quotes

  • Adam Selipsky, CEO of AWS:

    "Anthropic offers the 'leading models in the market right now' in some areas."