- Amazon reports that growth in its cloud computing business slowed in the first quarter, discouraging investors.
- AWS sales slowed in April as well.
- Despite this, Amazon’s revenue increased 9.4% in the first quarter of 2023, and the sale of advertising and services rented from sellers have increased.
Amazon.com said in financial report of the first quarter of 2023 that growth in its cloud computing business (Amazon Web Services, AWS) is slowing, discouraging investors who understood that the most profitable division of the company had been able to weather the crisis.
In an online conference on Thursday night, April 27, after having published the numbers for the first three months of the year, Investors took notice that sales on AWS also slowed in April.
Likewise, all this does not mean that AWS has lost money, quite the contrary, its revenues grew 16 percent between January and March, to 21.4 billion dollars.
However, that growth rate is the lowest since Amazon began breaking out sales for that business unit.
Amazon shares, which had risen 12.1 percent when the company published the report, then fell back as much as they had risen on the low AWS data.
This Friday, April 28, meanwhile, Amazon shares fall an additional 2 percent ahead of the Wall Street open.
Amazon and its business in the cloud
For industry analysts, the slowdown comes as companies are looking to cut spending fearing a deeper recession, which is hurting AWS growth, which could slip back to single digits.
The data is not good if one takes into account that until the beginning of 2022, this segment of Amazon’s business was growing above 35 percent year-on-year.
AWS is the biggest player among cloud services, where it competes with other giants like Microsoft (Azure) and Alphabet (Google Cloud).
The unit has been the main source of operating income in recent years, money with which it has financed ventures in new areas.
One of the analysts’ questions was to find out what Amazon is doing in relation to artificial intelligence, the topic of the moment after the spread of ChatGPT, to which the executive director, Andy Jassy, replied that the firm has been around for 25 years. experience making investments in machine learning.
“That theme runs deep in everything we do,” he said, adding that AWS is going to benefit from generative AI models.
Another fact, in this case more predictable, is that growth also slowed down in Amazon’s main business, e-commerce, which has been in decline since the “boom” of the pandemic.
An important point is that the sale of advertising increased 21.5 percent to 9,511 million dollars and services rented to vendors grew 18.1 percent (29.800 million dollars in the quarter).
Amazon’s total revenue, meanwhile, rose 9.4 percent between January and March, up to 127.410 million dollars. Operating income, meanwhile, was 4,800 million.
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