Amazon exceeds expectations, boosted by AI and Anthropic

New York - Amazon reported better-than-expected results for the first quarter, driven primarily by its cloud computing subsidiary, Amazon Web Services (AWS). The division continues to benefit from the appetite for artificial intelligence (AI).

The Seattle-based group also saw its profit soar following a revision of the book value of its stake in AI leader Anthropic, which boosted its earnings by 16.8 billion dollars.

Net income reached 30.3 billion dollars, an increase of 77 percent year-over-year. Earnings per share, a key metric for investors, stood at 2.78 dollars, compared to the 1.66 dollars consensus from analysts compiled by FactSet.

Historically focused on e-commerce, Amazon has evolved to become the world's leading provider of cloud computing. The renowned “cloud” is essential for the development and use of artificial intelligence.

AWS, the cloud subsidiary, “now has an annualised revenue run rate of 150 billion dollars,” revealed Amazon's chief executive officer, Andy Jassy, during a conference call on Wednesday.

If it were spun off from the rest of the group founded by Jeff Bezos, AWS alone would rank among the world's 50 largest publicly traded companies by revenue. “I have never seen a technology grow as fast as AI,” commented Jassy.

Amazon has just made a significant move by announcing that models from OpenAI, the creator of ChatGPT, would now also be hosted on the group's AI platform, Bedrock. Previously, the Californian start-up had an exclusive contract with Microsoft.

The group's “expansion of its already extensive list of AI partners and investments aims to keep Amazon's offering ahead of the competition,” explained Sky Canaves, an analyst at Emarketer. The company already had close ties with OpenAI's main competitor, Anthropic. It recently strengthened this relationship by injecting another five billion dollars in capital, following a previous investment of eight billion dollars.

New chip giant

“AWS's growth (+28 percent YoY) is the highest in years,” noted Sky Canaves, who also highlighted “the improvement in operating margins.” The pace set by AWS (+28 percent) is significantly higher than that of Amazon's traditional businesses, whose revenues grew by only 14 percent YoY. The group's total revenue was 181.5 billion dollars (+17 percent). To reduce its dependence on major processor players, particularly Nvidia, Amazon has been manufacturing its own chips since 2015.

It has developed Trainium, designed for developing AI models, and Graviton, which is better suited for the daily use of these models, a process known as inference.

Unlike Google and its Tensor Processing Unit (TPU), Amazon does not sell its chips. It only leases them to its AWS cloud customers.

“If our chips were a separate company from the rest of the group, they would represent a 50 billion dollar annualised revenue run rate,” specified Jassy, which is equivalent to the revenue generated by the American company Intel.

The Amazon CEO stated that most of the initial volumes of the next-generation Trainium, the fourth of its kind, “has already been reserved,” “even though it won't be widely available for another 18 months.” Having its own chips will allow Amazon to “save tens of billions of dollars in capital expenditure each year,” according to Jassy.

In after-hours trading following the Wall Street close, Amazon's stock was up more than 3 percent. According to Sky Canaves, investor enthusiasm was somewhat dampened by what were seen as “cautious” forecasts and a contraction in free cash flow due to investments.

This article was translated to English using an AI tool.

OR CONTINUE WITH

Amazon

Artificial Intelligence

financial results