Amazon’s profits jumped thanks to strong seasonal trading and strong growth in its powerful cloud computing business.
The world’s largest retailer generated revenue of $170 billion in the three months to December, up 14% from the same period in 2022 and beating Wall Street expectations of about $166 billion.
Fourth-quarter net profit rose to $10.6 billion from $27.8 billion a year earlier, after the company took steps to cut costs and end years of rapid expansion after the pandemic. Earnings per share amounted to $1.03.
The company’s shares rose 5.5% in outside trading in New York.
Amazon, which has a stock market valuation of $1.6 trillion, cut 27,000 jobs last year and has continued in recent weeks, albeit at a slower pace.
Andy Jassy, the group’s chief executive, said on Thursday: “The fourth quarter was a record-breaking holiday shopping season, setting up a strong 2023 for Amazon. While we made progress in revenue, operating income and free cash flow There has been considerable progress, but we are most pleased with the continued invention and customer experience improvements across our business areas.”
Amazon has built a vast digital empire around its e-commerce platform, from smart speakers to sports broadcasts. It also leads the lucrative cloud computing market through Amazon Web Services (AWS), although Microsoft, now valued at $3 trillion, has chipped away at its lead through broader integration of artificial intelligence. The company announced ahead of its earnings call that it would integrate an AI-powered shopping assistant called Rufus into its app. Jassy said on the earnings call that Amazon’s artificial intelligence products are “really resonating with customers,” although revenue has yet to meaningfully contribute to the company’s bottom line.
On Thursday, the company said it would launch an artificial intelligence shopping assistant called Rufus on its mobile app.
Regulators have been trying to curb the growth of the giant conglomerate: earlier this week, Amazon abandoned its $1.4 billion purchase of robot vacuum company iRobot amid European opposition. U.S. regulators announced last week that they would investigate the company’s dealings with emerging artificial intelligence companies such as Anthropic.
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AWS’ fourth-quarter revenue grew 13% to $24.2 billion. Jassy noted that Amazon’s fast-growing advertising business continues to “deliver positive results”: sales in the unit increased 27% to $14.7 billion.
For the current quarter ending in March, Amazon expects sales to grow as much as 13%. Operating profit is also estimated to rise significantly, from $4.8 billion to $8 billion to $12 billion.
