Amazon has surpassed earnings expectations in Q1 2023, primarily due to its cloud and advertising units. The company reported a profit of $3.2 billion, which was $1 billion higher than analysts’ predictions. Despite customers and businesses being cautious with spending, Amazon’s online shopping saw a surge, contributing to its earnings.
Following the announcement, Amazon’s shares rose by over 10%, but later fell slightly below the day’s closing price due to customer budget constraints. However, Andrew Lipsman, principal analyst at Insider Intelligence, believes that “for the first time in several quarters, Amazon may finally have a bit of wind at its back.”
Amazon CEO, Andy Jassy, commended the company’s teams for delivering exceptional customer service amidst an uncertain economy. He also mentioned that the company’s Stores business has improved cost-to-serve in the fulfillment network while increasing product delivery speed.
In contrast, Amazon announced plans to lay off 9,000 employees from its workforce in March, following 18,000 layoffs in January. Despite this, the company’s workforce stood at 1.5 million people in December 2022.
Amazon’s AWS cloud computing unit saw revenue increase to $21.4 billion, but costs reduced operating income to $5.1 billion compared to $6.5 billion in the same quarter last year. Andrew Lipsman believes that Amazon’s robust performance in AWS and advertising sectors indicates a possible turnaround in the enterprise and digital ad sectors.
Like Amazon, Microsoft and Alphabet’s cloud computing businesses contributed significantly to their earnings in Q1. However, these tech giants are navigating companies spending more cautiously in the current macro environment, but remain optimistic about their respective industries’ growth.