Amazon profits surge 35% as AI investments drive growth
AFP
Despite the stellar results, investors seemed worried about Amazon's big cash outlays to pursue its AI ambitions.
Photo:
123RF
Amazon has reported a 35 percent jump in quarterly profits as the e-commerce giant says major investments in artificial intelligence has been paying off.
The Seattle-based company posted net profit of $18.2 billion (NZ$30.9 billion) for the second quarter that ended June 30, compared with $13.5 billion (NZ$22.9 billion) in the same period last year.
Net sales climbed 13 percent to $167.7 billion (NZ$284.7 billion), beating analyst expectations and signalling that the global company was surviving the impacts of the high-tariff trade policy under US President Donald Trump.
"Our conviction that AI will change every customer experience is starting to play out," chief executive Andy Jassy said, pointing to the company's expanded Alexa+ service and new AI shopping agents.
Amazon Web Services (AWS), the company's world leading cloud computing division, led the charge with sales jumping 17.5 percent to $30.9 billion (NZ$52.45 billion).
The unit's operating profit rose to $10.2 billion (NZ$17.3 billion) from $9.3 billion (NZ$15.8 billion) a year earlier.
The strong AWS performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited major cloud providers as companies race to adopt generative AI technologies.
Despite the stellar results, investors seemed worried about Amazon's big cash outlays to pursue its AI ambitions, sending its share price more than three percent lower in after-hours trading.
The company's free cash flow declined sharply to $18.2 billion (NZ$30.9 billion) for the trailing 12 months, down from $53 billion (NZ$90 billion) in the same period last year, as Amazon ramped up capital spending on AI infrastructure and logistics.
The company spent $32.2 billion (NZ$54.7 billion) on property and equipment in the quarter, nearly double the $17.6 billion (NZ$29.9 billion) spent a year earlier, reflecting massive investments in data centres and backroom capabilities.
Amazon has pledged to spend up to $100 billion (NZ$169.8 billion) this year, largely on AI-related investments for AWS.
For the current quarter, Amazon forecast net sales between $174.0 billion (NZ$295 billion) and $179.5 billion (NZ$304.8 billion), representing solid growth of 10-13 percent compared with the third quarter of 2024.
Operating profit was expected to range from $15.5 billion (NZ$26.3 billion) to $20.5 billion (NZ$34.8 billion) in the current third quarter, which was lower than some had hoped for and likely also a factor in investor disappointment.
- AFP
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