Amazon gives Wall Street mixed financial picture in earnings report
E-commerce company posts high cloud computing sales but gives a cautious sales forecast for the fourth quarter Amazon offered a mixed picture of its financial health on Thursday in its quarterly earnings report. The e-commerce company gave a cautious sales forecast for the current fourth quarter, which encompasses the critical holiday shopping period, after delivering fiscal third-quarter results…
Amazon released its quarterly earnings report on Thursday, presenting a mixed outlook on its financial health. While the e-commerce giant reported impressive growth in its cloud computing unit, it offered a cautious outlook for its fourth quarter sales, which includes the pivotal holiday shopping season.
Amazon's cloud computing unit, known as AWS, experienced a 39.3% increase in sales for the latest quarter, ending on 30 September, surpassing the 37% growth seen in the previous quarter. This marked the fastest growth rate in nearly five years for the company.
However, the broader picture was not as positive. Investors reacted negatively, with Amazon's shares falling more than 6% in after-hours trading following the release of the earnings report. This was largely due to investors' focus on the company's core business, rather than the strong growth in its cloud division.
Amazon had previously announced plans to hire 300,000 US seasonal workers for the upcoming holiday shopping period, up from 250,000 workers the previous year. This hiring decision has been closely monitored by investors who are interested in seeing if Amazon's substantial investments in artificial intelligence (AI) are starting to yield results.
In July, Amazon's CEO and president, Andy Jassy, disclosed to investors that the company now expects capital spending, primarily on AI initiatives, to total $220 billion for the current fiscal year. This figure represents a significant increase from the $200 billion investment plan announced in February and is notably higher than the $128 billion spent on capital spending in the previous year. The primary reason for this increase, according to Jassy, was the rising cost of memory chips.
Jassy had previously stated that even at the $220 billion level, Amazon would not have sufficient capacity to meet all of its customers' demands this year. The latest earnings report from Alphabet, Google's parent company, released on Wednesday, had raised concerns among investors. Alphabet reported weaker growth for the summer than analysts had anticipated and had also burned through more cash during the latest quarter, based on a measure called free cash flow.
The company's stock suffered a significant drop on Thursday, erasing half a trillion dollars in market value.
Written by urgent.news from Guardian Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.