Latest news with #AndyJassy
Yahoo
41 minutes ago
- Business
- Yahoo
Amazon CEO wants to put ads in your Alexa+ conversations
Amazon CEO Andy Jassy sees an opportunity to deliver ads to users during their conversations with the company's AI-powered digital assistant, Alexa+, he said during Amazon's second-quarter earnings call Thursday. 'People are excited about the devices that they can buy from us that has Alexa+ enabled in it. People do a lot of shopping [with Alexa+]; it's a delightful shopping experience that will keep getting better,' said Jassy on the call with investors and Wall Street analysts. 'I think over time, there will be opportunities, as people are engaging in more multi-turn conversations, to have advertising play a role to help people find discovery, and also as a lever to drive revenue.' Amazon says it has rolled out Alexa+ to millions of customers, part of an effort to make its legacy digital assistant capable of agentic behaviors and more natural to talk to. Alexa+ is Amazon's answer to generative AI voice assistants from OpenAI, Google, and Perplexity that have made legacy systems feel outdated. However, the business models behind generative AI products remain unclear. Amazon has made Alexa+ free for Prime customers (who pay $14.99 a month) and added a $20-a-month subscription tier for Alexa+ on its own. Jassy suggested on Thursday that Alexa+ could eventually include subscription tiers beyond what's available today — perhaps an ad-free tier. Up until now, ads have only appeared in Alexa in limited ways. Users may occasionally see a visual ad on Amazon's smart display device, the Echo Show, or hear a pre-recorded ad in between songs on one of Alexa's smart speakers. But Jassy's description of an AI-generated ad that Alexa+ delivers in a multistep conversation, which could help users find new products, is uncharted territory for Amazon and the broader tech industry. Marketers have expressed interest in advertising in AI chatbots, and specifically Alexa+, but exactly how remains unclear. Amazon's competitors in the AI space seem to think advertising is a promising business model for generative AI, too. Google is exploring how to infuse ads into its AI-powered search experience, AI mode. OpenAI CEO Sam Altman said he's open to a 'tasteful' form of advertising in ChatGPT. Amazon is spending a fortune to catch up in the AI race. In the second quarter of 2025, Amazon's capital expenditures rose to $31.4 billion, up 90% from the same period last year. A large part of that increased spending is to develop Amazon's in-house AI chips and build out data centers to support AI models. While the revenue of Amazon's cloud business, AWS, grew 18% in the second quarter, the company likely needs to generate new business to pay for these investments. Jassy is betting that users will talk to Alexa+ more than Alexa, which could drive more advertising and more shopping on However, early reviews of Alexa+ have been mixed. Amazon has reportedly struggled to ship some of Alexa+'s more complicated features, and the rollout has been slower than many expected. There's a lot to figure out before Amazon puts ads in Alexa+. Like most AI models, Alexa+ is not immune to hallucinations. Before advertisers agree to make Alexa+ a spokesperson for their products, Amazon may have to come up with some ways to ensure that its AI will not offer false advertising for a product. Jassy seems enthusiastic about making advertising a larger part of Amazon business. Amazon's advertising revenue went up 22% in the second quarter, compared to the same period last year. Delivering ads in AI chatbot conversations may also raise privacy concerns. People tend to talk more with AI chatbots compared to deterministic assistants, like the traditional Alexa and Siri products. As a result, generative AI chatbots tend to collect more information on users. Some users might be unsettled by having that information sold to advertisers and having ads appear in their natural language conversations with AI. Sign in to access your portfolio
Business Insider
43 minutes ago
- Business
- Business Insider
Amazon CEO Andy Jassy tried to calm concern about AI cloud competition. Wall Street isn't buying it.
On Thursday, Amazon CEO Andy Jassy scrambled to calm investor concerns over growth at the company's cloud and AI business. Wall Street wasn't buying it. Jassy fielded tough analyst questions about AWS growth and its position in the AI race. The stock tumbled 7% in after-hours trading, weighed down by disappointing profit guidance and Jassy's vague responses on AI. During the call, Jassy was asked about rival companies' "significantly faster cloud growth." AWS reported revenue growth of 17%, a far slower rate than Microsoft and Google's cloud businesses. Jassy said AWS has a much bigger revenue base, which makes comparing growth rates difficult. He also said AWS has better security and functionality than peers, while stressing its "pretty significant" leadership position in cloud market share. "It's a $123 billion annual revenue run rate business, and it's still early," Jassy said, referring to AWS's annualized sales figure. "It is a very unusual opportunity that we're very bullish about." Morgan Stanley analyst Brian Nowak followed up by asking about Wall Street's "narrative right now that AWS is falling behind" in AI, with concern about losing share to competitors. Jassy launched into a sprawling response, calling the AI market "early" and "top-heavy," dominated by a handful of popular models and apps. He pointed to AWS's lower-cost Trainium AI chip as a potential draw for customers seeking better price performance. He rattled off new agentic tools and developer features, then circled back to familiar territory, comparing today's AI shift to the early days of the original cloud boom, which AWS pioneered. "Remember 85% to 90% of global IT spend is still on-premises," Jassy said. "If you believe that equation's going to flip, which I do and we do, you have a lot of legacy infrastructure that you've got to move." Baird senior research analyst Colin Sebastian told BI that despite AWS's continued growth, the market's reaction is concerning. "Contrasting with Azure and Google Cloud Platform growth, it's hard to disprove the emerging Wall Street narrative that competitors are gaining ground and momentum from AWS," he said. During the call, Jassy added that AWS still has capacity issues across electricity, chips, and server components, with power being the "single biggest constraint." He said it will likely take several quarters to meet the demand shortage. One encouraging sign for AWS is that its cloud market share has barely budged over the past year. In the second quarter, the top 3 cloud providers' market share was virtually flat, with AWS at 30%, and Microsoft and Google each holding 20% and 13%, respectively, according to Synergy Research. Amazon's spokesperson declined to comment.
CNBC
43 minutes ago
- Business
- CNBC
Why we're keeping our buy rating on Amazon — even as shares tumble after earnings
Amazon on Thursday delivered better-than-expected results on both the top and bottom lines for the second quarter. But a small revenue beat from Amazon Web Services and mixed third-quarter guidance weren't enough to impress investors, knocking the stock down after hours. Revenue increased 13% year over year to $167.7 billion, beating expectations for $162.09 billion, according to estimates compiled by LSEG. Earnings per share based on generally accepted accounting principles (GAAP) increased to $1.68, compared with $1.26 last year and the $1.33 estimate, per LSEG. Operating income increased 31% over last year to $19.17 billion, beating the $16.87 billion consensus forecast. Bottom line The market will nitpick a couple of areas in the quarter over the next few days, including questioning why AWS didn't deliver the same type of revenue upside as rivals Microsoft Azure and Google Cloud. The criticism is fair, but we don't see it as a sign that AWS is losing out on the AI race. And while the company's guidance for operating income didn't live up to expectations, management is known for providing a wide range and beating initial projections. Therefore, we urge caution in reading too deeply into the light outlook when the company is projecting another quarter of healthy revenue growth. Most importantly, the thesis on Amazon is unchanged. The drivers we look at to determine the long-term direction of the stock are revenue growth from AWS and advertising — the two high-margin revenue streams. Both were above expectations. Online stores are also important, but our focus there is on management's ability to further lower the cost of serving customers. If there are opportunities to bring costs down, which there are, margins should continue to expand. And as we've said before, if margins are going higher, the stock price follow. As a result, we view Thursday's sell-off — shares are down more than 6% in after-hours trading, giving back all of its year-to-date gains — as a buying opportunity. We're reiterating our 1 rating and increasing our price target to $250 from $240. AMZN 1Y mountain AMZN 1 year return Commentary Revenue at cloud unit Amazon Web Services (AWS) increased 17.5% year over year to $30.87 billion. It's a tiny beat of about $91 million versus the consensus estimate. The growth rate was also a little faster than the 16.9% rate in the first quarter. The upside here wasn't as eye-popping as what Microsoft Azure reported on Wednesday , leading to some disappointment. Once again, management said its AI cloud business — which was reaffirmed as being a multi-billion-dollar business growing annually at a percentage rate in the triple digits — had enough supply to keep up with demand. In the post-earnings call with investors, Amazon CEO Andy Jassy pointed to several areas facing supply constraints, but emphasized that the biggest challenge at the moment is access to power. This helps explain why shares of GE Vernova , one of the largest manufacturers of gas turbines in the world, have doubled this year. Other areas of constraint are chips and components to make the servers. Jassy said it will take several quarters to resolve these shortages, echoing what Microsoft's Amy Hood said on Wednesday. AWS finished the quarter with a backlog of $195 billion. That's up 25% year over year and about $6 billion from the first quarter. But margins from the cloud computing segment were disappointing, too. After nearing 40% in the first quarter, operating margin came back to earth and settled at 32.9% in the second quarter. That's down from both the consensus forecast and last year's result of 35.5%. The company cited a seasonal step up in stock-based compensation costs, higher depreciation expense, and FX rates as reasons for the margin decline from last year. It was revenue beats across the board for the rest of the company's business segments. Some of the notable outperformances were in online stores, which beat estimates by $2.5 billion, third-party seller services, and a revenue growth acceleration in the high-margin advertising services business. Jassy shot down some of the recent reporting that said prices have increased on the e-commerce platform as a result of tariffs. "There continues to be a lot of noise about the impact that tariffs will have on retail prices and consumption. Much of it thus far has been wrong and misreported," he said. "As we said before, it's impossible to know what will happen." "But what we can share is what we've seen thus far, which is that through the first half of the year, we haven't yet seen diminishing demand nor prices meaningfully appreciating," Jassy added. Amazon Why we own it : Amazon may be widely known for online shopping, but its cloud business is the real breadwinner. Advertising is another fast-growing business with high margins. Investment in robust e-commerce logistics infrastructure makes its online storefront the place to be as management works to aggressively decrease delivery times and reduce overall costs. Prime leverages free shipping and video streaming with tons of other perks to keep users paying every month. Competitors : Walmart , Target , Microsoft and Alphabet Most recent buy : April 15, 2025 Initiated : February 2018 By geography, North America sales increased 11% and operating margins expanded 189 basis points from last year to 7.5%. In the international segment, Amazon's revenue increased 16%, but operating income surged thanks to a material increase in operating margins, which surpassed 4% and reached a new company record. Margins for both regions improved from the first quarter as the company continued to reduce the cost to serve its e-commerce customers. Amazon also got a benefit from the recently deployed DeepFleet, an AI model that manages the movement of its robotics in fulfillment centers. Jassy said DeepFleet is helping robots travel more efficiently, translating to faster delivery times and lower costs for customers. On the capital expenditure side, Amazon invested roughly $31.4 billion in the second quarter, which was about $5 billion more than expected and a step up from $24.3 billion in the first quarter. Management expects the second quarter capex figure to represent the quarterly capital investment rate for the second half of the year, implying full year capex to be about $117 billion. That's an increase of management's prior plan to invest $100 billion this year. The primary driver of these investments will go to AWS to support demand for AI services, but Amazon is also investing in its fulfillment and transportation network. With earnings from the cloud computing "hyperscalers" now complete, once again we saw all the major players spend more than anticipated and signal plans to invest more aggressively in the quarters ahead. Guidance Amazon's 2025 third-quarter guidance was better than anticipated on sales but missed on operating income. The company expects net sales to increase 10% to 13% year over year to $174 billion to $179.5 billion. This outlook is well above the consensus estimate of $173.27 billion. Online sales are expected to increase in the third quarter over the second, and one reason why is the successful four-day Prime Day shopping event held earlier in July. Jassy said it set records for sales, number of items sold, and the number of Prime signups in the weeks leading up to the longer event. However, third-quarter operating income is expected to land between $15.5 billion and $20.5 billion, which at a midpoint of $18 billion misses the Street consensus estimate of $19.5 billion. Guidance always matters, but so does historical context. The company has a history of underpromising and overdelivering. Here's a good example of what we mean by this: Three months ago, Amazon management said it expected second-quarter revenues to be between $159 billion and $164 billion, a range that proved to be too conservative since Amazon just reported $167.7 billion in sales. The same goes for operating income. Last quarter, the company guided to $13 billion and $17.5 billion, and Amazon just printed $19.17 billion. Amazon won't beat the high end of its outlook every quarter, but we take some comfort that the top end of its third-quarter outlook is above the consensus forecast. (Jim Cramer's Charitable Trust is long AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
an hour ago
- Business
- Yahoo
Amazon posts strong Q2 growth, provides mixed guidance
Amazon on Thursday posted second-quarter net revenue of $167.7 billion and adjusted earnings per share of $1.68. Wall Street was anticipating earnings per share of $1.33 and revenue of $162.1 billion, according to Bloomberg consensus estimates. The e-commerce and cloud services giant's guidance for the third quarter reflects resilient consumer demand, but uncertainty from tariffs and trade policies. Amazon's (NASDAQ: AMZN) expects third quarter net revenue between $174 billion and $179.5 billion, reflecting 10% to 13% growth above analysts' estimate of $173.27 billion. Third quarter operating income is expected to be between $15.5 billion and $20.5 billion, compared with $17.4 billion in the third quarter of 2024. Wall Street has an estimate of $19.49 billion for third-quarter operating income. 'As we've said before, it's impossible to know what will happen,'CEO Andy Jassy said during a call with analysts after the market closed. 'Where will tariffs finally settle, especially China? What happens when we deplete the inventory we forward-bought, or that our selling partners forward-deployed in advance of the tariffs going into effect? If costs end up being higher, who will absorb them? But what we can share is what we've seen thus far, which is that through the first half of the year, we haven't yet seen diminishing demand nor prices meaningfully appreciating.' North American sales rose 11% year-over-year in the second quarter to $100.1 billion, while international sales jumped 16% year-over-year to $36.8 billion. Jassy said the company had one of its biggest-ever Prime Day sales events (July 8 to July 11), and expanded same-day delivery to help drive sales growth. 'This year's Prime Day was our biggest ever, with record sales, number of items sold, and number of Prime signups in the three weeks leading up to the Prime Day,' Jassy said. AmazonQ2/2025Q2/2024Y/Y % ChangeNet revenueOperating incomeNet incomeShipping costsNorth American salesInternational salesAdjusted earnings per share The post Amazon posts strong Q2 growth, provides mixed guidance appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
TechCrunch
an hour ago
- Business
- TechCrunch
Amazon CEO wants to put ads in your Alexa+ conversations
Amazon CEO Andy Jassy sees an opportunity to deliver ads to users during their conversations with the company's AI-powered digital assistant, Alexa+, he said during Amazon's second-quarter earnings call Thursday. 'People are excited about the devices that they can buy from us that has Alexa+ enabled in it. People do a lot of shopping [with Alexa+], it's a delightful shopping experience that will keep getting better,' said Jassy on the call with investors and Wall Street analysts. 'I think over time, there will be opportunities, as people are engaging in more multi-turn conversations, to have advertising play a role to help people find discovery, and also as a lever to drive revenue.' Amazon says it has rolled out Alexa+ to millions of customers, part of an effort to make its legacy digital assistant capable of agentic behaviors and more natural to talk to. Alexa+ is Amazon's answer to generative AI voice assistants from OpenAI, Google, and Perplexity that have made legacy systems feel outdated. However, the business models behind generative AI products remains unclear. Amazon has made Alexa+ free for Prime customers (which pay $14.99 a month), and added a $20-a-month subscription tier for Alexa+ on its own. Jassy suggested on Thursday that Alexa+ could eventually include subscription tiers beyond what's available today — perhaps an ad-free tier. Up until now, ads have only appeared in Alexa in limited ways. Users may occasionally see a visual ad on Amazon's smart display device, the Echo show, or hear a pre-recorded ad in between songs on one of Alexa's smart speakers. But Jassy's description of an AI generated ad that Alexa+ delivers in a multi-step conversation, which could help users find new products, is unchartered territory for Amazon and the broader tech industry. Marketers have expressed interest in advertising in AI chatbots, and specifically Alexa+, but exactly how remains unclear. Amazon's competitors in the AI space seem to think advertising is a promising business model for generative AI, too. Google is exploring how to infuse ads into its AI-powered search experience, AI mode. OpenAI CEO Sam Altman said he's open to a 'tasteful' form of advertising in ChatGPT. Techcrunch event Tech and VC heavyweights join the Disrupt 2025 agenda Netflix, ElevenLabs, Wayve, Sequoia Capital — just a few of the heavy hitters joining the Disrupt 2025 agenda. They're here to deliver the insights that fuel startup growth and sharpen your edge. Don't miss the 20th anniversary of TechCrunch Disrupt, and a chance to learn from the top voices in tech — grab your ticket now and save up to $675 before prices rise. Tech and VC heavyweights join the Disrupt 2025 agenda Netflix, ElevenLabs, Wayve, Sequoia Capital — just a few of the heavy hitters joining the Disrupt 2025 agenda. They're here to deliver the insights that fuel startup growth and sharpen your edge. Don't miss the 20th anniversary of TechCrunch Disrupt, and a chance to learn from the top voices in tech — grab your ticket now and save up to $675 before prices rise. San Francisco | REGISTER NOW Amazon is spending a fortune to catch up in the AI race. In the second quarter of 2025, Amazon's capital expenditures rose to $31.4 billion, up 90% from the same period last year. A large part of that increased spending is to develop Amazon's in-house AI chips, and build out data centers to support AI models. While the revenue of Amazon's cloud business, AWS, grew 18% in the second quarter, the company likely needs to generate new business to pay for these investments. Jassy is betting that users will talk to Alexa+ more than Alexa, which could drive more advertising and more shopping on However, early reviews of Alexa+ have been mixed. Amazon has reportedly struggled to ship some of Alexa+'s more complicated features, and the rollout has been slower than many expected. There's a lot to figure out before Amazon puts ads in Alexa+. Like most AI models, Alexa+ is not immune to hallucinations. Before advertisers agree to make Alexa+ a spokesperson for their products, Amazon may have to come up with some ways to ensure that its AI will not offer false advertising for a product. Jassy seems enthusiastic about making advertising a larger part of Amazon business. Amazon's advertising revenue went up 22% in the second quarter, compared to the same period last year. Delivering ads in AI chatbot conversations may also raise privacy concerns. People tend to talk more with AI chatbots compared to deterministic assistants, like the traditional Alexa and Siri products. As a result, generative AI chatbots tend to collect more information on users. Some users might be unsettled by having that information sold to advertisers, and having ads appear in their natural language conversations with AI.
