Amazon profits soar from robust trading season

The world’s largest retailer meets Wall Street expectations with $170 billion in revenue while continuing recent job cuts

Amazon’s profits have soared due to strong seasonal trading and significant growth in its dominant cloud computing sector.

The world’s largest retailer achieved a revenue of $170 billion in the three months ending in December, marking a 14% increase compared to the same period in 2022. This figure surpassed Wall Street’s expectations, which were around $166 billion.

In the fourth quarter, net income surged to $10.6 billion from $278 million the previous year, as the company focused on cost reduction and transitioned from years of rapid expansion since the onset of the pandemic. Earnings per share reached $1.03.

During after-hours trading in New York, shares in the company rose by 5.5%.

Following Amazon’s decision to cut 27,000 jobs last year, the company has continued to implement layoffs, albeit at a reduced pace, in recent weeks. This comes as Amazon, valued at $1.6 trillion on the stock market, aims to streamline its operations.

Andy Jassy, the group’s CEO, stated on Thursday, “This Q4 marked a record-breaking holiday shopping season and concluded a strong year for Amazon in 2023. While we achieved significant progress in revenue, operating income, and free cash flow, what we are most pleased with is the ongoing innovation and enhancements in customer experience across our operations.”

Amazon has created an extensive digital empire around its e-commerce platform, encompassing smart speakers and sports broadcasting. Through Amazon Web Services (AWS), it also dominates the lucrative cloud computing market, although Microsoft, now valued at $3 trillion, has eroded its lead as companies strive to integrate artificial intelligence into their services.

The company revealed its plan to introduce a shopping assistant called Rufus, powered by AI, into its app before the earnings call. During the call, Jassy mentioned that Amazon’s AI offerings are “strongly appealing to customers,” despite revenue not yet significantly impacting the company’s financial performance.

On Thursday, the company announced the launch of Rufus, an AI-powered shopping assistant, on its mobile app.

Regulators have taken steps to limit the company’s expansion: earlier this week, Amazon withdrew its planned $1.4 billion acquisition of the robot vacuum cleaner company iRobot due to opposition from European authorities. Last week, US regulators announced an investigation into the company’s dealings with emerging AI firms like Anthropic.

In the fourth quarter, revenue at AWS rose by 13% to $24.2 billion. Jassy highlighted the continued strong performance of Amazon’s rapidly growing advertising business, which saw a 27% increase in sales to $14.7 billion.

For the current quarter ending in March, Amazon anticipates sales growth of up to 13%. The company also expects significant growth in operating profits, estimating an increase from $4.8 billion to between $8 billion and $12 billion.