Amazon reports strong Q1 results driven by cloud-computing unit and Prime Video ads

Amazon has posted robust results for Q1, bolstered by its cloud-computing unit and advertising revenue from its Prime Video streaming service.

The Seattle-based e-commerce giant racked up revenues of $143.31billion in the first quarter, marking a 13% rise compared to the same period last year. Its net income reached $10.43billion, equating to 98 cents per share, significantly smashing Wall Street expectations of 84 cents a share, according to FactSet data.

"It was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results," said Amazon chief executive Andy Jassy in a statement.

The country's largest online retailer enjoyed bountiful returns from the festive shopping season, aided by strong consumer spending, discount offerings, and expedited shipping times. Late March saw another discount event scheduled by Amazon, right at the tail end of Q1.

Despite rising prices and increased borrowing costs due to interest rate hikes by the Federal Reserve, consumer expenditure in the US continues to grow. Although the national economy did somewhat decelerate in the first quarter, employment remains stable. Amazon's US customers are being "very thoughtful" about their spending, according to chief financial officer Brian Olsavsky.

He noted consumers are looking for deals and trading down, and that the company is "particularly" seeing lower spending in Europe. Aside from its core retail business, Amazon said first-quarter sales in its cloud computing unit, Amazon Web Services, amounted to $25.04billion, up 17% from the same period last year.

AWS, whose customers are mostly businesses, has been the cornerstone of Amazon's strategy in the competitive artificial intelligence race among big tech companies. The unit saw a slowdown in growth last year as companies cut back on costs amid concerns about the economy.

However, Amazon has been using its AI offerings to push back on that trend and attract more enterprises to its cloud business. Mr Jassy said AI capabilities have reaccelerated AWS' growth rate and it is now on pace for $100 billion in annual revenue.

Hours before Amazon released its earnings report on Tuesday, the company announced a full rollout of a business chatbot called Q that it says can help employees be more productive at work. Last month, it finished its $4billion investment in San Francisco-based AI startup Anthropic, a competitor to Microsoft-allied OpenAI.

Anthropic is collaborating with Amazon to develop so-called foundation models that underpin AI technologies. The online advertising business of the company also saw a 24% surge, largely driven by sponsored product ads, according to Mr Olsavsky.

He revealed that Amazon, which began displaying advertisements on Prime Video in late January, currently has a "light" number of ads compared to TV or other streaming providers. Mr Olsavsky stated that the ads, which customers can bypass with an additional monthly fee of $2.99, are performing well and "attracting a number of new advertisers who are not currently using Amazon advertising services."

Amazon.com Inc. 's shares rose approximately 2% in after-hours trading. Under Mr Jassy's leadership, Amazon has been trimming costs across various sectors of its business to maintain profitability. This year, the firm slashed hundreds of roles across AWS, Prime Video and MGM Studios.

Its subsidiaries, the popular social media platform Twitch and the audiobook service Audible, have also made redundancies. Furthermore, Amazon has encountered regulatory obstacles. In January, the company abandoned a deal to acquire robot vacuum maker iRobot due to regulatory challenges in Europe.

It has also faced a lawsuit from the Federal Trade Commission over antitrust issues. Amazon anticipates net sales between $144billion and $149billion for the second quarter.