Shares in Amazon.com, Inc. (NASDAQ: AMZN) jumped nearly 9% in the pre-market trading Friday as the company posted better-than-expected revenue and profits for the second quarter.
The e-commerce giant raked in $6.7 billion in profits, equivalent to 65 cents per share, for the three months ended June 30. This figure far exceeded the expectations of industry analysts surveyed by FactSet, who had anticipated earnings of $3.64 billion.
This turnaround comes after Amazon weathered a loss during the same period last year, mainly due to a substantial hit from its investment in electric vehicle startup Rivian Automotive (NASDAQ: RIVN). However, this time, the profits have been fortified by a pre-tax valuation gain of $0.2 billion from its Rivian investment.
The relentless cost-cutting measures and strategic moves have propelled Amazon (NASDAQ: AMZN) to achieve an 11% increase in overall revenue, reaching $134.4 billion. This figure outperformed the analyst projections of 8.5% growth.
“It was another strong quarter of progress for Amazon,” Amazon CEO Andy Jassy said in a statement.
The spotlight also shone on Amazon Web Services (AWS), the Amazon cloud unit, which recorded $22.1 billion in revenue.
Jassy said growth in the cloud business, which had slowed since last year as companies cut back on costs, “stabilized as customers started shifting from cost optimization to new workload deployment.”
AWS faced a slight slowdown in growth, growing by 12% this quarter compared to 16% in the first quarter and 33% year-on-year. Part of the slowdown can be explained by the fact that AWS is the market leader in the cloud arena, which makes it challenging to sustain the higher levels of growth it had in the earlier days.
Amazon (NASDAQ: AMZN) has also been rolling out AI tools to empower its users to create their own applications. The move aims to attract customers and stay competitive in the generative AI space. Last week, the company revealed that its AI model, Amazon Bedrock, has been adopted by various entities, including the Irish carrier Ryanair.
Meanwhile, the Amazon flagship online retail business, which had shown signs of slowing following a boom earlier in the pandemic, staged a comeback with a 5% growth. This marks its best performance since the third quarter of last year.
During a call with reporters on Thursday, Brian Olsavsky, Amazon’s Chief Financial Officer, mentioned that consumers are still cautious with their budgets, opting for more generic brands, even at upscale grocery chain Whole Foods, owned by Amazon.
In a logistical overhaul, Amazon’s delivery mechanism has transformed. The innovative regionalization model, comprising eight strategically positioned hubs across the country, has propelled delivery speeds. Over half of Prime orders across the top 60 U.S. metro areas are now delivered the same day or the next, marking a new zenith in Amazon Prime service. Amazon also publicized its plans to double the number of same-day delivery sites in the coming years.
Amazon’s ambition to dominate the grocery sector saw progress, as physical store sales, including Amazon Fresh, Go stores, and Whole Foods, witnessed a 7% growth rate. The company is actively pursuing this opportunity, with plans to integrate orders from Whole Foods and other grocery stores into a single cart through an upcoming online service.
Per Bloomberg, the company has showcased revamped Fresh stores with improved product selections, self-checkout options, and Krispy Kreme Doughnut shops.
Amazon forecasts revenue between $138 billion and $143 billion during the third quarter.
Kevin Putnam is a financial journalist and editor based in New York. He specializes in editing news and analysis related to U.S. stock market.
