Amazon posts strong quarterly revenue, profit on Web sales, cost cuts

“The retail giant’s slowdown last year appears to be in the rear-view mirror as it has embarked on significant cost-cutting throughout this year and sharpened its focus on key growth areas, such as its high-margin online marketplace — and the services it can sell to those sellers — and advertising,” said Zak Stambor, an analyst at Insider Intelligence.

Sales for its cloud unit, Amazon Web Services, increased 12% to $23.1 billion. The business’s operating income of $6.98 billion was about $1.3 billion more than analysts expected. AWS, which tends to account for more profit than the rest of the company combined, reported the highest operating margin since the first quarter of 2022.

Revenue up 13% to $143.1 billion, higher than estimates of $141.6 billion

Operating Income up over 5x to $11.2 billion, higher than estimates of $7.71 billion

Advertising sales up 26% year-on-year to $12 billion

Current quarter sales guidance: Between $160 billion and $167 billion, in-line with estimates of $166.6 billion

Chief Financial Officer Brian Olsavsky stopped short of saying that AWS growth has bottomed out, explaining that the division is seeing a number of cross currents. But it may be a sign the pullback in corporate spending on cloud services isn’t over yet, and a potential worry for investors.

While Olsavsky said the consumer is “spending money, but cautious and deal driven,” Stambor, of Insider Intelligence, was more optimistic. Amazon’s “successful Prime Big Deal Days event — which Insider Intelligence believes generated $5.9 billion in US retail e-commerce sales, an 8% gain year-over-year — give it strong momentum as we head into the heart of the holiday season,” Stambor said.

Amazon's shares ended 2% lower in regular trading but gained 5% in extended hours. The stock is up over 40% so far in 2023.