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Amazon’s profits will rise in the first quarter of 2024, driven by AI and ad sales



America’s senior financial regulator has increased pressure on Amazon to be more open over its global tax affairs by rejecting the technology group’s move to block a shareholder vote on greater transparency.

Amazon continues its string of impressive earnings reports, showing rising profits for the first quarter of 2024, supported by strong performance in artificial intelligence (AI) and ad sales.

The e-commerce giant reported a remarkable total revenue of $143.3 billion in the first three months of the year, up 13% from the same period in 2023 and exceeding Wall Street expectations of $142.65 billion. Notably, the company’s net profit more than tripled to $10.4 billion, up from $3.17 billion in the corresponding period of 2023.

Amazon CEO Andy Jassy attributes this remarkable achievement to the company’s relentless focus on AI, which has fueled the growth of Amazon Web Services (AWS), its cloud computing division. AWS revenue witnessed a robust 17% year-over-year increase to $25 billion, accounting for an impressive 62% of total operating profit. Jassy underlines the significant growth potential in the generative AI sector, indicating that there is ample room for expansion in this domain.

The increase in AWS revenues comes after a recent slowdown in the industry, attributed to the post-pandemic recovery phase, which saw companies invest heavily in cloud infrastructure to facilitate remote work. However, executives note that this trend is stabilizing, with increasing demand for AI expected to further strengthen AWS’s cloud services.

Advertising revenue also saw substantial growth, up 24% year-over-year to $11.8 billion, driven by Amazon’s expansion of advertising initiatives, including the introduction of ads on Prime Video earlier this year.

As Amazon ramps up its investments in cloud computing and AI capabilities, Jassy recognizes the need for increased infrastructure spending to support these technologies. Capital expenditures (capex) for the quarter reached $14 billion, with further increases expected in subsequent quarters of the fiscal year. Jassy emphasizes that capital expenditures are strategically aligned with clear signals of revenue generation opportunities.

The earnings report coincides with Amazon’s announcement of a significant $11 billion investment to build additional data centers in Indiana, promising at least 1,000 new jobs. In addition, the company is expanding its partnership with chip manufacturer Nvidia to improve its AI offering.

Investors have responded positively to Amazon’s recent cost-cutting measures, including significant layoffs totaling more than 27,000 employees since the end of 2022, and hundreds more layoffs in early 2024. These strategic initiatives underscore Amazon’s commitment to efficiency and profitability amid its continued expansion and technological progress. .