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Amazon Forecasts Quarterly Revenue Below Estimates

By Reuters
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Amazon Forecasts Quarterly Revenue Below Estimates

Amazon.com forecast second-quarter revenue below Wall Street expectations, as it expects tepid spending from cost-conscious businesses on its cloud-computing services.

First-quarter sales increased 13% to $143.3 billion (€133.29 billion), higher than the $142.5 billion (€132.53 billion) average according to LSEG data.

The company expects revenue of $144.0 billion (€133.92 billion) to $149.0 billion (€138.57 billion) for the current quarter ending June, compared with analyst consensus expectations of $150.07 billion (€139.56 billion), according to LSEG data.

Amazon Web Services (AWS), the largest provider of cloud-computing services, posted a 17% rise in revenue to $25.0 billion in the first quarter, compared with expectations of $24.53 billion.

That compares with a rise in cloud-computing revenue of 31% for Microsoft and 28% for Alphabet for the January-to-March period.

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Amazon is racing to keep abreast of rivals in offering generative artificial-intelligence software. Competitors include Alphabet as well as Microsoft-backed OpenAI.

"The combination of companies renewing their infrastructure modernisation efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate," said CEO Andy Jassy in a statement. He said AWS is now on pace to achieve $100 billion in annual sales.

Quarterly Highlights

Net income more than tripled to $10.4 billion in the first quarter, or 98 cents per diluted share, compared with $3.2 billion, or 31 cents per diluted share in 2023's first quarter. That beat analysts' average EPS estimate of 83 cents.

Amazon bucked a Big Tech trend of announcing a dividend, after rivals Alphabet and Meta Platforms rolled out the investor goodie. The latter two announcements were cheered by investors who pushed the stock prices higher.

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Amazon and Tesla remain the only members of the so-called Magnificent Seven tech stocks that do not offer dividends. Its shares have climbed about 15% in 2024, outperforming the S&P 500's gain of about 6%.

The company ended the quarter with 1.52 million employees, about 4,000 fewer than at year-end 2023, but higher than a year earlier by 56,000. That was despite Amazon cutting at least 27,000 jobs last year and continuing to trim positions across a number of units.

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