On Tuesday, Amazon.com released quarterly results that exceeded Wall Street’s projections, citing growth in cloud computing due to increased interest in artificial intelligence. Speaking to investors, CEO Andy Jassy stated that Amazon “has a big opportunity in front of us” in providing AI clients with services.

The Seattle-based internet and e-commerce company’s shares increased by less than 2% during extended trading after its revenue projection for the current quarter fell short of forecasts. The regular session ended with a 3.3% decrease in the stock.

Amazon Quarterly Report:

During a press conference call, chief financial officer Brian Olsavsky announced that capital expenditures will increase from $14 billion in the first quarter to $16 billion for the whole year. “That will be the low point for the year as far as capex by quarter,” he explained.

“Most of that will be to support AWS infrastructure, specifically generative AI efforts,” he stated later during an investor call. According to him, as more and more customers want longer-term contracts, Amazon is making upfront investments to expand its AI products to satisfy demand.

Amazon is rushing to release generative AI software to stay ahead of competitors. Alphabet and Microsoft-backed OpenAI are competitors.

LSEG data shows that first-quarter sales rose 13% to $143.3 billion, above the expectation of $142.5 billion. In the first quarter, net income quadrupled to $10.4 billion.

Based on LSEG data, the business projects sales for the current quarter ending in June of $144.0 billion to $149.0 billion, compared with analyst average forecasts of $150.07 billion.

“It seems that business clients are prepared to shift more processes to the cloud again after a year and a half of reducing cloud prices. According to D.A. Davidson analyst Gil Luria, this is good news for many software companies that sell to enterprise customers and Amazon.

About Amazon Web Services:

The biggest supplier of cloud computing services, Amazon Web Services (AWS), reported first-quarter revenue of $25.0 billion, up 17% from $24.53 billion to $25.0 billion. In contrast, cloud computing revenue increased by 31% for Microsoft and 28% for Alphabet between January and March.

With OpenAI’s ChatGPT launch in late 2022, (AI) has become a significant focus in Silicon Valley, generating billions of dollars in financing and a wild rush to integrate chatbots and other AI-powered features into as many businesses as possible. Amazon said on Tuesday that its “Q” chatbot for companies is now open to the public. Earlier last year, the company launched the Rufus service, which assists users of its website in finding new goods.

According to a statement from Jassy, AWS is now on track to reach $100 billion in revenue annually. Following introduction of the investor goodie by competitors Alphabet and Meta Platforms, Amazon broke from the Big Tech trend and announced a dividend. Investors applauded the last two statements, driving up the price of the stocks.

Amazon and Tesla are the only companies in the Magnificent Seven tech equities that do not pay dividends. In 2024, its shares have increased by around 15%, outpacing the roughly 6% rise made by the S&P 500.

Income during the first quarter of 2023 was $10.4 billion, or 98 cents per diluted share, as opposed to $3.2 billion, or 31 cents per diluted share, in 2023—above analysts’ 83 cents average EPS projection.

The efforts made by Amazon to expand its advertising division contributed to the quarter’s outcomes. Ad revenues for the corporation totaled $11.8 billion, a 24% increase from the previous year. According to Jassy, advertisers are thrilled by the company’s addition of unskippable commercials to its Prime Video streaming service this year. For $2.99 a month, customers can choose not to.

After the quarter, the corporation employed 1.52 million people, which was 4,000 fewer than it had at the end of 2023 but 56,000 more than it had a year earlier. That was even though Amazon continued to reduce personnel across several businesses and eliminated at least 27,000 people in the previous year.