Amazon’s Q2 profits double as AWS growth surges

Amazon‘s cloud computing division, AWS, has roared back to life, propelling the e-commerce giant to record profits in the second quarter of 2024. The company’s financial results, released on Tuesday, show a 19% year-on-year increase in AWS sales, reaching $26.3 billion. This reacceleration in cloud growth, coupled with strong performances in advertising and subscription services, helped Amazon offset slower growth in its core e-commerce business.

CEO Andy Jassy attributed AWS’s success to the ongoing trend of businesses modernising their infrastructure and migrating to the cloud. He also highlighted the growing adoption of generative AI, with AWS offering a suite of tools and services to support this emerging technology. “As companies continue to modernize their infrastructure and move to the cloud, while also leveraging new Generative AI opportunities, AWS continues to be customers’ top choice,” Jassy said in a statement.

Overall, Amazon’s net sales increased 10% year-on-year to $148 billion, slightly ahead of analyst expectations. Operating income more than doubled to $14.7 billion, reflecting the company’s improved cost control and the higher-margin nature of its cloud and advertising businesses. Net income also surged, reaching $13.5 billion, or $1.26 per diluted share.

While AWS was the star performer, Amazon’s other segments also contributed to the strong quarter. Advertising revenue grew 20% to $12.8 billion, driven by strong demand from sellers and vendors. Subscription services, which include Amazon Prime memberships, also saw healthy growth, with sales up 10% to $10.9 billion.

Amazon’s core e-commerce business, however, experienced slower growth. Net sales in North America increased 9% to $90 billion, while international sales grew 7% to $31.7 billion. The company attributed this slowdown to ongoing macroeconomic challenges, including inflation and rising interest rates.

Looking ahead, Amazon expects continued growth in the third quarter, albeit at a slightly slower pace. The company forecasts net sales between $154 billion and $158.5 billion, representing growth of 8% to 11% year-on-year. Operating income is expected to be between $11.5 billion and $15 billion.

Amazon’s strong Q2 results underscore the company’s resilience in a challenging economic environment. The reacceleration in AWS growth is particularly encouraging, as it suggests that businesses are continuing to invest in cloud computing despite broader economic uncertainty.

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