Amazon reported higher sales and earnings for the third quarter, and it was boosted by its fast-growing web services business.
Amazon posted higher fiscal third-quarter profit and sales compared with a year ago, fuelled by accelerating growth in its cloud computing business and strong spending by its customers looking for low prices at a time when inflation is a concern.
The results, announced Thursday, beat Wall Street expectations and regained investors' confidence in the company's prominent cloud computing arm. Amazon’s AWS cloud unit reported 20% year-on-year growth, following a 17.5% growth in the fiscal second quarter. Andy Jassy, president and CEO of Amazon, noted in a statement that AWS is growing at a pace it hasn't seen since 2022.
Even though Amazon issued a cautious sales outlook for the fiscal fourth quarter, its share price climbed 13.2% in Thursday’s after-hours trading session.
Last week, Amazon grappled with a massive outage of AWS after a problem disrupted internet use around the world for most of the day, taking down a broad range of online services, including social media, gaming, food delivery, streaming and financial platforms.
Amazon CEO Andy Jassy said that Amazon is seeing strong momentum and growth across the whole company as artificial intelligence drives "meaningful improvements in every corner of our business."
Jassy also pointed out that in stores, Amazon continues to realise the benefits of innovating in its fulfillment network, and it's on track to deliver to Prime members at the fastest speeds ever again this year, expand same-day delivery of perishable groceries to over 2,300 communities by the end of year, and double the number of rural communities with access to Amazon's same-day and next-day delivery.
CEO on redundancies: ‘It’s about culture’
Amazon is rapidly automating its warehouses, raising big questions about how many workers it will need in the future.
In fact, Amazon announced on Tuesday that it's cutting about 14,000 corporate jobs as it ramps up spending on artificial intelligence and cuts costs elsewhere. Teams and individuals affected by the job cuts were notified on Tuesday. Amazon has about 350,000 corporate employees and a total workforce of about 1.56 million. The cuts amount to about a 4% reduction in its corporate workforce.
Jassy told analysts that the announcement on job cuts wasn't "really financially driven and it's not even really AI driven."
"It's culture," he said. "And if you grow as fast as we did for several years, the size of businesses, the number of people, the number of locations, the types of businesses you're in, you end up with a lot more people than you had before, and you end up with a lot more layers."
Late last month, Amazon unveiled a new robotics system — being tested in South Carolina — for its warehouses that coordinates multiple arms to perform picking, stowing, and consolidating tasks simultaneously. This technology effectively collapses three assembly lines into one, the company said.
Amazon is also testing an AI agent that helps human managers deploy workers and avoid bottlenecks. The system allows operators to spend less time analysing dashboards and more time coaching teams, creating safer work environments, the company said.
Increased product mix are powering results
Amazon posted net income of $21.1 billion (€18.2bn) for the quarter ended 30 September. That's up from $15.3bn (€13.2bn) a year ago.
The company's sales rose to $180.2bn (€155.8bn), up from $158.9bn (€137.4bn) last year.
The number of items that Amazon sold in the latest period increased 11%, the company said.
In late July, Jassy touted its more than 2 million sellers in its third-party marketplace, all with different strategies of whether to pass on higher costs to shoppers. He also told analysts that it hadn't seen "diminishing demand nor prices meaningfully appreciating."
Amazon said it expects sales for the fiscal fourth quarter to be in the range of $206bn (€178bn) to $213bn (€184bn).
