Amazon reported a 35 per cent jump in quarterly profits Thursday as the e-commerce giant said major investments in artificial intelligence began paying off.<\/p>\n
But the Seattle-based company\u2019s profit outlook for the current quarter came in lower than hoped for, with investors worried that the cost of AI was weighing on the bottom line.<\/p>\n
Amazon\u2019s share price was trading about six per cent lower in after hours trading.<\/p>\n
This was despite a stellar second quarter that exceeded analyst expectations, much like it did for its AI focused rivals Google, Microsoft and Meta, which posted bumper results for the period.<\/p>\n
\u201cOur conviction that AI will change every customer experience is starting to play out,\u201d said Chief Executive Andy Jassy, pointing to the company\u2019s expanded Alexa+ service and new AI shopping agents.<\/p>\n
Amazon posted net profit of US$18.2 billion for the second quarter that ended June 30, compared with US$13.5 billion in the same period last year.<\/p>\n
Net sales climbed 13 per cent to US$167.7 billion, beating analyst expectations and signaling that the company was surviving the impacts of the high-tariff trade policy under U.S. President Donald Trump.<\/p>\n
\u201cThere continues to be a lot of noise about the impact that tariffs will have on retail prices and consumption. Much of it thus far has been wrong and misreported,\u201d Jassy told analysts.<\/p>\n
\u2018Curveballs\u2019<\/p>\n
Amazon Web Services (AWS), the company\u2019s world leading cloud computing division, led the charge with sales jumping 17.5 per cent to US$30.9 billion.<\/p>\n
The unit\u2019s operating profit rose to US$10.2 billion from US$9.3 billion a year earlier.<\/p>\n
The strong AWS performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited major cloud providers as companies race to adopt generative AI technologies.<\/p>\n
But investors seemed worried about Amazon\u2019s big cash outlays to pursue its AI ambitions, sending its share price more than three percent lower in after-hours trading.<\/p>\n
The company\u2019s free cash flow declined sharply to US$18.2 billion, down from US$53 billion in the same period last year, as Amazon ramped up capital spending on AI infrastructure and logistics.<\/p>\n
The company spent US$32.2 billion on property and equipment in the quarter, nearly double the US$17.6 billion spent a year earlier, reflecting massive investments in data centers and backroom capabilities.<\/p>\n
Amazon has pledged to spend up to US$100 billion this year, largely on AI-related investments for AWS.<\/p>\n
For the current quarter, Amazon forecast net sales between US$174.0 billion and US$179.5 billion, representing solid growth of 10-13 per cent compared with the third quarter of 2024.<\/p>\n
But operating profit was forecast in a wide range from US$15.5 billion to US$20.5 billion in the current third quarter, which was more cautious than some had hoped for.<\/p>\n
The caution indicates that \u201cthere\u2019s still potential for curveballs from ongoing trade negotiations and accelerating competition on the AI front,\u201d said Emarketer analyst Sky Canaves.<\/p>\n","protected":false},"excerpt":{"rendered":"Amazon reported a 35 per cent jump in quarterly profits Thursday as the e-commerce giant said major investments…\n","protected":false},"author":2,"featured_media":38039,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,276,277,49,48,61],"class_list":["post-38038","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-ca","tag-canada","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/38038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=38038"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/38038\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/38039"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=38038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=38038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=38038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}