Amazon forecasts quarterly revenue below estimates
FILE PHOTO: The logo of Amazon is seen at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 15, 2023. REUTERS/Gonzalo Fuentes/File Photo
By Yuvraj Malik and Greg Bensinger
(Reuters) -Amazon.com forecast second-quarter revenue below Wall Street expectations on Tuesday, as it expects tepid spending from cost-conscious businesses on its cloud-computing services.
First-quarter sales increased 13% to $143.3 billion, higher than the $142.5 billion average according to LSEG data.
Amazon shares rose as much as 6% in after-hours trading but settled to a gain of around 3%, after closing down 3.3% in the regular session.
The company expects revenue of $144.0 billion to $149.0 billion for the current quarter ending June, compared with analyst consensus expectations of $150.07 billion, according to LSEG data.
Amazon Web Services (AWS), the largest provider of cloud-computing services, posted a 17% rise in revenue to $25.0 billion in the first quarter, compared with expectations of $24.53 billion.
That compares with a rise in cloud-computing revenue of 31% for Microsoft and 28% for Alphabet for the January-to-March period.
Amazon is racing to keep abreast of rivals in offering generative artificial-intelligence software. Competitors include Alphabet as well as Microsoft-backed OpenAI.
“The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate,” said CEO Andy Jassy in a statement. He said AWS is now on pace to achieve $100 billion in annual sales.
Net income more than tripled to $10.4 billion in the first quarter, or 98 cents per diluted share, compared with $3.2 billion, or 31 cents per diluted share in 2023’s first quarter. That beat analysts’ average EPS estimate of 83 cents.
Amazon bucked a Big Tech trend of announcing a dividend, after rivals Alphabet and Meta Platforms rolled out the investor goodie. The latter two announcements were cheered by investors who pushed the stock prices higher.
Amazon and Tesla remain the only members of the so-called Magnificent Seven tech stocks that do not offer dividends. Its shares have climbed about 15% in 2024, outperforming the S&P 500’s gain of about 6%.
The company ended the quarter with 1.52 million employees, about 4,000 fewer than at year-end 2023, but higher than a year earlier by 56,000. That was despite Amazon cutting at least 27,000 jobs last year and continuing to trim positions across a number of units.
(Reporting by Yuvraj Malik in Bengaluru and Greg Bensinger in San FranciscoAdditional reporting by Noel Randewich in Oakland, CaliforniaEditing by Anil D’Silva and Matthew Lewis)