Amazon far exceeds expectations with $6.7 billion in second-quarter net profit

Like Google and Meta (Facebook) last week, Amazon significantly beat market expectations in the second quarter, thanks in part to a strong recovery in online sales in North America. The e-commerce giant announced on Thursday that it had made $134.4 billion in sales and a net profit of $6.7 billion, while analysts expected $131.5 billion and $3.64 billion, respectively. These two figures, up sharply over one year, are also well above the group's own forecasts.

“We continued to drive down our costs in our distribution network, while delivering to our Prime subscriber customers faster than ever,” Andy Jassy, ​​Amazon boss, said in the statement. The company's stock gained nearly 7% in electronic trading after the close of trading on Wall Street. In North America, the e-commerce platform saw its revenue increase by 11% to 82.5 billion dollars, of which it generated 3.2 billion in operating profit, instead of a loss of several hundred million. at the same time last year.

AWS, the company's cloud (remote computing) arm, made $22 billion in revenue (down 12 percent), but only $5.4 billion in operating profit, down from last year. “AWS growth has stabilized as customers have begun a transition from optimizing costs to implementing new ways of working,” said Andy Jassy. He said Amazon has deployed new so-called generative artificial intelligence (AI) tools to allow companies to train their own language models, the computer programs on which conversational software like ChatGPT is based.

Analysts expected the US group to “show clear signs of recovery in growth rates across its core retail, advertising and cloud businesses to paint a more optimistic picture for the second half of the year.” , said Andrew Lipsman of Insider Intelligence. In the first quarter, revenues from the cloud, via the dedicated subsidiary Amazon Web Services (AWS), and advertising had offset the zero growth in online sales, which had been stalled for more than a year. Amazon must also “convince investors that it is not falling behind Google and Microsoft in the field of AI, which could have longer-term repercussions for AWS”, underlined the analyst.

After a difficult year in 2022, the tech giants have largely rebounded despite an economic context still marked by inflation and high interest rates. Most have thanked thousands of people this winter, improving their margins. Over the April-June period, Meta (Facebook, Instagram, WhatsApp) achieved its first quarter with double-digit revenue growth since the end of 2021. Its revenue ($32 billion) and profit ($7 8 billion), better than expected, delighted Wall Street. Alphabet (Google) also pleased the market, in particular thanks to its cloud activity (remote computing), whose turnover increased by 27% in one year, to 8 billion dollars, after having achieved its first operating profit in the previous quarter.

The two giants of digital advertising can thus invest even more in so-called generative artificial intelligence, at the center of all discussions in Silicon Valley since the phenomenal launch of ChatGPT at the end of last year. Microsoft is leading the race thanks to its longstanding investments in OpenAI (ChatGPT), but all of its rivals have moved to rapidly deploy new AI and generative AI tools on their platforms.