Amazon.com (AMZN) on Thursday reported first-quarter earnings that topped Wall Street targets amid cost-cutting by the e-commerce giant. Amazon stock fell in extended trading as management’s earnings call hold raised questions about how long the slowdown in cloud computing growth will last.
First-quarter sales of its cloud computing unit, Amazon Web Services, rose 16% to $21.4 billion, slowing from 37% growth in the same period a year earlier. Analysts expected AWS to grow 15% for the March quarter.
On Amazon’s earnings call, management said Amazon Web Services saw slower growth in April versus the first quarter.
AMZN Stock: How Long Will the Cloud Slowdown Last?
This spooked investors because Wall Street analysts predicted that AWS revenue growth would decrease in the June quarter of 2023, and then slowly accelerate. However, if the US economy falls into recession, the AWS slowdown may bottom out later. The Big Three cloud computing giants are hopeful that AI workloads will eventually lead to a rebound.
Amazon stock initially jumped 12% upon the preliminary earnings release in extended trading. But investors have tempered their enthusiasm. Shares fell 2% to 107.57 in the last move in the stock market today.
After the market closed, Amazon earnings were 31 cents per share on an adjusted basis.
AMZN stock revenue rose 9% to $127.4 billion. Meanwhile, analysts expected Amazon to report earnings of 21 cents per share on revenue of $124.6 billion.
Amazon stock: cost-cutting moves
Advertising revenue rose 23% to $9.51 billion, easily beating estimates of $9.05 billion.
Amazon expected revenue for the June quarter of $130 billion in the middle of its forecast, in line with analyst estimates.
Also, Amazon said it expects second-quarter operating income of $3.8 billion in the middle of its forecast, below analyst estimates of $4.4 billion.
In January, Amazon said it would lay off 18,000 workers, the largest cut in its 28-year history. In March, it announced plans to cut another 9,000 jobs.
As Amazon’s earnings report approaches, shares in the e-commerce giant are up 25% in 2023. Amazon stock carries a relative strength rating of 43 out of the best 99 possible, according to IBD stock check.
Follow Reinhardt Krause on Twitter @tweet For updates on 5G wireless networks, artificial intelligence, cybersecurity, and cloud computing.
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