Amazon profits soar with robust trading, cloud

The world’s largest retailer surpasses Wall Street’s expectations with $170 billion in revenue, while also continuing to reduce jobs in recent weeks

Amazon’s profits have surged due to strong seasonal trading and robust growth in its dominant cloud computing business.

The world’s largest retailer achieved $170 billion in revenue in the three months ending in December, a 14% increase from the same period in 2022, surpassing Wall Street’s expectations of around $166 billion.

In the fourth quarter, net income rose to $10.6 billion from $278 million the previous year, as the company implemented cost-cutting measures and sought to stabilize after years of rapid expansion triggered by the pandemic. Earnings per share reached $1.03.

During after-hours trading in New York, shares of the company increased by 5.5%.

Following Amazon’s job cuts of 27,000 last year, despite ongoing layoffs at a reduced rate, the company, valued at $1.6 trillion on the stock market, has continued to downsize in recent weeks.

Andy Jassy, the CEO of the group, stated on Thursday: “This Q4 marked a record-breaking holiday shopping season and concluded a strong 2023 for Amazon. While we achieved significant progress in revenue, operating income, and free cash flow, what we are most pleased with is the ongoing innovation and enhancements to customer experience across our operations.”

Amazon has developed a vast digital empire centered on its e-commerce platform, expanding into areas such as smart speakers and sports broadcasting. It dominates the lucrative cloud computing market through Amazon Web Services (AWS), although Microsoft, now valued at $3 trillion, has narrowed the gap with deeper integrations of artificial intelligence. Prior to the earnings call, the company announced plans to integrate an AI-powered shopping assistant named Rufus into its app. Jassy mentioned on the call that Amazon’s AI offerings are “strongly appealing to customers,” despite revenue not yet significantly impacting the company’s bottom line.

On Thursday, the company announced the launch of Rufus, an AI-powered shopping assistant, on its mobile app.

Regulators have moved to limit the expansive conglomerate’s expansion. Earlier this week, Amazon scrapped a proposed $1.4 billion acquisition of the robot vacuum cleaner company iRobot due to opposition from European authorities. Last week, US regulators announced an investigation into the company’s agreements with emerging AI firms like Anthropic.

In the fourth quarter, revenue at AWS grew by 13% to reach $24.2 billion. Jassy highlighted that Amazon’s rapidly expanding advertising business continues to deliver favorable outcomes, with sales from this division rising by 27% to $14.7 billion.

For the current quarter ending in March, Amazon anticipates sales growth of up to 13%. It also expects a substantial increase in operating profits, estimating a rise from $4.8 billion to between $8 billion and $12 billion.