Amazon:
Amazon reported its fourth-quarter results on Thursday, surpassing analysts’ estimates and providing strong guidance for the current quarter. The stock saw a significant increase of over 8% in extended trading.
The earnings per share came in at $1.00, exceeding the expected 80 cents by LSEG (formerly known as Refinitiv). Additionally, the revenue reached $170 billion, surpassing the projected $166.2 billion by LSEG.
Apart from these figures, Wall Street is also closely monitoring other numbers in the report. Amazon Web Services generated $24.2 billion, matching StreetAccount’s estimate. Furthermore, the advertising segment brought in $14.7 billion, surpassing the expected $14.2 billion.
For the first quarter, Amazon anticipates sales between $138 billion and $143.5 billion, indicating a growth rate of 8% to 13%. Analysts had predicted revenue of $142.1 billion, according to Refinitiv.
Amazon’s impressive earnings performance demonstrates the success of CEO Andy Jassy’s efforts to control costs. Net income surged to $10.6 billion, or $1.00 per share, compared to $278 million, or 3 cents per share, in the previous year.
To streamline operations, the company laid off 27,000 employees between late 2022 and mid-2023 and discontinued some of its riskier ventures. It continues to seek cost-saving measures in various areas, including its fulfillment business. In January, Amazon announced cuts in Prime Video, MGM Studios, Twitch, and other units.
During a press conference, Amazon CFO Brian Olsavsky emphasized the company’s cautious approach to new investments. However, he stated that 2024 would not be solely focused on efficiency but rather on investing in new ventures and areas that resonate with customers. Olsavsky also mentioned that Amazon would strive to find efficiencies and optimize operations where possible.
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The fourth-quarter revenue experienced a notable increase of 14% to reach $170 billion. This growth can be attributed to the holiday shopping season and the success of Amazon’s October Prime Day event, both of which exceeded the company’s expectations.
In a statement, Jassy expressed that the Holiday shopping season in Q4 was exceptionally successful, setting a new record for Amazon. Furthermore, he highlighted that the year 2023 was robust for the company. As they step into 2024, Jassy emphasized that their teams are working diligently and efficiently, with numerous exciting prospects lying ahead.
During the fourth quarter, sales at Amazon Web Services (AWS) reached $24.2 billion, a 13% increase that aligned with the expectations of Wall Street. Although this represents a slight improvement from the previous quarter’s 12% growth, it signifies a deceleration compared to the 20% growth experienced in the same period the previous year.
Over the past year, AWS has witnessed a slowdown in growth due to businesses reducing their cloud expenditure. However, Olsavsky noted that this trend is diminishing as cost optimizations reach their limit, and new workloads are on the rise. He also mentioned the growing interest in AWS’ generative artificial intelligence products, particularly “Q,” an AI chatbot designed for businesses.
During a conference call with analysts, Jassy acknowledged that generative AI services currently contribute to a relatively small portion of the business. Nevertheless, Amazon believes that these services have the potential to generate revenue in the tens of billions of dollars within the next few years.
Prior to the earnings release, Amazon introduced Rufus, a generative AI shopping assistant, which is currently being tested among a select group of users in the U.S.
Amazon’s advertising unit, which has proven to be profitable, witnessed a 27% year-over-year sales growth, reaching $14.7 billion. The company recently started displaying ads on Prime Video content, a strategic move that analysts predict will generate significant new revenue. Olsavsky mentioned that advertisers have shown great enthusiasm, but Amazon intends to maintain low ad loads.