Amazon's slowing cloud business overshadows return to profitability, revenue beat

This was the fifth straight quarter of revenue growth slowing at AWS. The management during the earnings call said that AWS revenue growth rate in April is running 500 basis points lower than that seen in the March quarter. Some analysts are expecting that a slowdown in corporate technology spending can push AWS growth rates into single-digits by the end of the year.

Companies have been trimming their cloud spend in recent months amid a challenging economic environment, and CFO Brian Olsavsky said that clients continue to "tighten their belts."

Shares that gained as much as 10 percent during the initial earnings report, fell 2 percent in after-hours trading post the earnings call.

For the current quarter, Amazon expects revenue to be between $127 billion - $133 billion. Analysts projections are for $129.8 billion. The guidance implies sales growth between 5-10 percent for the June quarter.

Amazon has shut several underperforming businesses, like a telehealth program and a line of fitness wearables. It’s also slowed new warehouse expansion and paused construction of its second headquarters in Virginia, dubbed HQ2 to keep costs in check.

The company has laid off closed to 76,000 people by the end of March, taking the total headcount to 1.46 million. Advertising growth remained strong during the quarter, growing 23 percent year-on-year.

Amazon returned to profitability during the quarter, reporting a $3.2 billion net profit, compared to a $3.8 billion loss in the same period last year.

Shares ended 4 percent higher in regular trading but fell 2.1 percent after-hours.