American Market Updates : Amazon provided robust guidance for the upcoming quarter along with fourth-quarter earnings that well above analysts’ expectations on Thursday. Over 8% of the stock increased during extended trading.
Sales for the first quarter of Amazon’s forecast range from $138 billion to $143.5 billion, or 8% to 13% growth. Refinitiv reports that analysts had predicted $142.1 billion in revenue.
Amazon’s results easily above Wall Street’s projections, demonstrating the success of CEO Andy Jassy’s cost-cutting measures. In comparison to the previous year, when net income was $278 million, or 3 cents per share, it increased to $10.6 billion, or $1.00 per share.
Between late 2022 and mid-2023, the corporation terminated 27,000 employees and abandoned some of its less successful ventures. It has persisted in searching for methods to reduce costs in other domains, like its fulfillment company. It revealed layoffs at Twitch, MGM Studios, and Prime Video in January, among other divisions.
On Thursday, Amazon CFO Brian Olsavsky informed reporters that while the business will continue to proceed cautiously with new expenditures, it does not regard 2024 as “a year of efficiency type thing.”
Olsavsky declared, “We’re going to keep investing in new things, new areas, and things that are resonating with customers.” “We will also take advantage of any opportunities to find efficiencies and do more with less.”
The fourth quarter saw a 14% increase in revenue to $170 billion. The timeframe takes into account the outcomes of the October Prime Day event and the holiday shopping season, both of which, according to the firm, exceeded its projections.
In a statement, Jassy added, “This Q4 was a record-breaking Holiday shopping season and closed out a robust 2023 for Amazon.” “We have a lot to be excited about as we head into 2024, and our teams are delivering at a rapid clip.”
In line with Wall Street’s prediction, Amazon Web Services’ sales increased 13% to $24.2 billion during the fourth quarter. While sales increased by 12% in the prior quarter, there has been a decline from the same period last year, when sales increased by 20%.
AWS’s growth has slowed over the past year as companies have reduced their cloud spending. However, Olsavsky stated that the business is witnessing a decline in such cost efficiencies and an increase in new workloads. He stated that AWS’s generative AI solutions, such the commercial AI chatbot “Q,” had attracted “a lot of interest.”
During a conference call with analysts, Jassy stated that while generative AI services are still a “relatively small” industry, the company anticipates that they will generate “tens of billions of dollars” in revenue over the course of the next several years.
Rufus is a generative AI shopping assistant that Amazon unveiled ahead of its results report on Thursday. It is currently being tested by a small group of American consumers.
Sales of Amazon’s lucrative advertising division increased 27% annually to $14.7 billion. Analysts predict that the company’s decision to start running advertisements on Prime Video content last month will bring in a sizable amount of additional money. Olsavsky stated that although Amazon intends to maintain modest ad loads, the company has noticed “a lot of enthusiasm” from advertisers.