Amazon quarterly profit doubles as cloud business grows

Amazon reported on Thursday that its profit in the recently ended quarter doubled to $13.5 billion with the help of renewed momentum of its Amazon Web Services (AWS) cloud computing business.

The e-commerce giant's sales of $148 billion fell just shy of lofty market expectations; however, shares slid more than four percent to $176.50 in after-market trades.

"We're continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth," said Amazon chief executive Andy Jassy.

Revenue at the AWS cloud computing unit grew to $26.3 billion compared with $22.1 billion in the same period a year earlier, according to earnings figures.

The $12.7 billion taken in from ads on the platform was also shy of expectations, with the market predicting $13 billion.

Retail, ads and cloud computing are considered Amazon's financial pillars.

"While Amazon has multiple levers it can pull, the outlook is becoming tighter," said GlobalData managing director Neil Saunders.

"Amazon will remain very profitable but the pace at which it can add to the bottom line appears to be waning."

Amazon -- like other tech giants investing in AI -- is also spending more money, a factor investors are watching keenly.

Microsoft saw its shares slip this week on earnings figures showing its crucial cloud computing unit did not grow as strongly as expected.

Shares of Google parent Alphabet dropped on concerns that ad revenue was slowing while costs were on the rise after its earnings release.

"Meta stands out from other tech firms that have AI ambitions because it already brings in a massive amount of revenue from digital advertising," said Sonata Insights founder and chief analyst Debra Aho Williamson.

"Unlike Google, which is grappling with making changes that will impact its core ad business, most of Meta's AI investments are either aimed at making advertising on its properties work better, or at building new features that could eventually become revenue drivers."

The head of Amazon's AWS cloud computing business, Adam Selipsky, who was helping lead the company's expansion into AI, unexpectedly left the company in June.

In a memo to staff, Selipsky said he was leaving with "mixed emotions," but "given the state of the business and the leadership team, now is an appropriate moment for me to make this transition."

Amazon sales and marketing executive Matt Garman took over as head of AWS.

AWS is a key subsidiary of the tech giant, capitalizing on the growing appetite among businesses for remote computer and artificial intelligence services.

AWS had 31 percent of the cloud computing market at the end of 2023, according to Stocklytics.

But rivals Microsoft and Google are gaining ground with their cloud businesses.

The race has become particularly heated since the deployment of ChatGPT-style artificial intelligence services that cloud companies are offering to clients who want to buy into the AI revolution.

But AWS is less known to the public and Amazon does not have flagship AI brands such as ChatGPT or Google's Gemini that are being deployed across those firms' lines of products.