amazon on Tuesday reported its biggest first-quarter profit as it continued to drive efficiencies from its retail business and fuel growth in its cloud computing operations.
The company was also for the first time on track to have $100 billion in annual cloud computing sales.
The company had revenue of $143.3 billion in the first three months of the year, up 13 percent from the previous year. Profits more than tripled to $10.4 billion. The results exceeded analysts' expectations.
“It was a strong start to the year across the business, and that can be seen in both the improvements in customer experience and financial results,” amazon CEO Andy Jassy said in a statement.
After a year in which companies reduced spending on technology, amazon's lucrative cloud computing business has been regaining momentum. Cloud computing sales rose 17 percent to $25 billion. The growth was the fastest in more than a year. Operating income from that business grew 84 percent to $9.4 billion, accounting for the majority of the company's operating profits.
amazon's stock price rose more than 3 percent in after-hours trading on Tuesday.
amazon spent about $14 billion on capital expenditures and leases in the quarter, a figure particularly driven by investments in cloud computing, Brian Olsavsky, amazon's chief financial officer, said on a call with investors. That amount was about $1 billion more than the same period last year. He said amazon expected to spend more as the year progresses, “primarily to take advantage of the generative ai opportunities we're seeing.”
The company has been building data centers and making other infrastructure investments to stay ahead in the race to turn ai advances into real businesses. Microsoft has been closure amazon's leadership in cloud computing, in part because customers want access to advanced artificial intelligence systems from its partner, the startup OpenAI.
(The New York Times sued OpenAI and Microsoft in December, alleging copyright infringement of news content related to their ai systems.)
Sales of generative ai services ran into “multi-million dollars” a year, Dave Fildes, amazon's head of investor relations, said at the news conference. Last week, Microsoft said ai accounted for more than a fifth of its cloud computing growth, leading analysts to estimate ai sales were around $1 billion in the quarter.
“Generative ai may be the biggest technological transformation since the cloud,” Jassy said in a letter to shareholders this month.
What analysts consider the most profitable parts of amazon's retail business are the ones that are growing the fastest. This includes advertising, which grew 24 percent to $11.8 billion. In January, amazon began running streaming video ads for Prime members, unless customers paid an additional $2.99 a month to opt out. The subscription business, which includes Prime and other upgrades, generated $10.7 billion, an increase of 11 percent.
amazon has focused on shipping products quickly by bringing more items to customers. The faster the delivery, the more customers turn to amazon. The company said Monday that 60 percent of items ordered by Prime members in major U.S. cities were delivered the same day or the next day they were ordered. The number of items purchased by customers increased 12 percent in the last quarter.
Bringing inventory closer to customers also reduces delivery costs, allowing amazon to sell more lower-cost items. Its operating profit in North America rose to $5 billion, up from less than $1 billion a year earlier.
Even as it makes capital investments, amazon has been burning through more cash than ever. He has made some deals, such as investing $4 billion in artificial intelligence startup Anthropic, but is surrounded by federal antitrust scrutiny, including a major lawsuit from the Federal Trade Commission.
In January, amazon abandoned a $1.7 billion acquisition of iRobot, which makes the Roomba vacuum cleaner, after regulators in the United States and Europe expressed skepticism about the deal. As of the latest quarter, it had $73 billion in cash and equivalents, up from $34 billion two years ago.
