Amazon’s AWS Growth Slows in First Quarter
Amazon recently released its first-quarter results, showing a slower pace of growth in its AWS cloud computing business. Compared to expectations and recent gains reported by competitors, AWS’s revenue increased by 16.9% year over year to $29.27 billion, slightly below forecasts that predicted 17.4% growth and $30.9 billion in sales. This marked the slowest growth for AWS in the past five quarters, as reported by CNBC.
Market Performance
The results came after Microsoft’s stronger-than-expected report on Azure revenue growing by 33% in the same period, setting higher expectations for AWS. Amazon’s shares initially dropped by as much as 5% in after-hours trading before narrowing losses to around 1%. Total revenue for the quarter reached $155.7 billion, slightly exceeding estimates, with a focus on AWS performance and the company’s near-term outlook.
Company Outlook
Amazon’s second-quarter revenue forecast ranged between $159 billion and $164 billion, compared to analyst expectations of $160.91 billion. CEO Andy Jassy addressed concerns over US tariffs on Chinese goods, noting an increase in buying activity in specific product categories. Third-party seller services’ revenue grew by 7% in the quarter, while Amazon’s online advertising business saw a 19% increase to $13.92 billion, surpassing expectations.
Competitor Insights
Microsoft’s cloud unit reported strong growth, with Azure revenue increasing by 33% and a total revenue of $70.07 billion, above expected figures. The Intelligent Cloud division, which includes Azure, generated $26.75 billion in revenue. Microsoft also noted growth in its personal computing division, with revenue rising by 6% to $13.37 billion.
Alphabet’s Performance
Alphabet reported steady performance across its businesses, with first-quarter revenue reaching $90.23 billion, up by 12% year over year. Google Cloud revenue rose by 28% to $12.26 billion, with the unit’s margin improving to 17.8%. Advertising revenue reached $66.89 billion, and YouTube ads contributed $8.93 billion.
Conclusion
In conclusion, while all three companies focus on AI infrastructure and cloud services, Amazon’s AWS growth has slowed compared to competitors like Microsoft and Alphabet. Investors are cautious about AWS’s performance and near-term guidance, especially with stronger growth reported in adjacent areas by Microsoft and Alphabet.
(Image by CNBC YouTube)
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