Amazon has released its quarterly revenue and profit figures, which beat expectations. However, the company’s growth in cloud services is expected to face a slowdown. According to Amazon’s CFO Brian Olsavsky, April revenue growth fell about five percentage points from the first quarter as cloud customers tried to reduce their bills. In response, Amazon has been helping customers cut costs and build long-term relationships.
The news led to a two percent drop in the stock, highlighting a difficult moment for the company. Amazon CEO Andy Jassy has been trying to reduce spending across the company’s many divisions in response to what he calls an uncertain economy.
The company also faces competition from Microsoft and Google, who are introducing high-profile artificial intelligence tools. Since November, Amazon has cut costs significantly, including plans to cut 27,000 corporate jobs. The workforce is down 10 percent, with 1.47 million full-time and part-time employees in the last quarter. Amazon has also terminated entire services, including its Halo health trackers, and restructured its national fulfillment operation to bring goods closer to shoppers and deliver them faster and cheaper.
The impact of the slowdown
Analysts have described the slowdown in Amazon’s cloud services as “massive” compared to Microsoft and Google. However, Amazon’s CFO stated that the economy has improved internationally, with falling inflation and increasing consumer confidence.
Long-term, despite the slowdown, Amazon is confident in its cloud services, with a shift to adopting generative AI, which can create text, images and other content from past data, presenting a huge opportunity for Amazon’s cloud. The company is turning to proprietary chips that can power most of what companies want to do with AI and its new AI tools.
Despite Microsoft’s financial report this week, which beat analysts’ expectations and attracted business through AI, Olsavsky insists Amazon hasn’t seen a shift in the competitive balance among cloud providers.
