Amazon’s AWS cloud computing platform can do more than just artificial intelligence, which could spell trouble for Alphabet and Microsoft.
Amazon shares increased by almost 3% after hours, trading at $180 per share, just after the e-commerce giant saw better-than-expected first-quarter earnings. The augment was partially driven by its AWS and advertising services division, the company said in its earnings release. Amazon shares are up 74% over the past year.
“The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’ AI capabilities are once again accelerating AWS’s growth rate (now reaching $100 billion in annual revenue),” said Andy Jassy, Amazon CEO, in a statement.
Sales of the company’s AWS division increased 17% year-over-year to $25 billion in the quarter. Such sales growth could put Amazon in a good position to compete with AI leaders like Microsoft and Alphabet.
During the company’s earnings call on Tuesday, Amazon’s Jassy told analysts that companies are choosing AWS because it is “relatively low-hanging fruit” that can lend a hand modernize the company’s infrastructure.
“Our AWS customers are excited about the opportunity to apply generative AI to transform customer and business experiences,” Jassy said. “We are seeing significant momentum on the AI front.”
Amazon appears to be banking on its AWS footprint. In its earnings release, the company said it plans to invest $5.3 billion in Saudi Arabia and $5 billion in Mexico over the next few years to build novel infrastructure centers. It also plans to invest $10 billion to build two data centers in Mississippi. The two centers are expected to create at least 1,000 jobs in the state, the company said.
Additionally, Jassy said during the company’s call that Amazon will continue to focus on its advertising efforts to place more sponsored content on its Prime Video platform. Its advertising business is driving sales “even though it’s at a very early stage.”
Seattle, Washington-based Amazon has exceeded Wall Street expectations. For the period, the company posted revenue of $143.3 billion, or about 0.98 cents per share. Analysts had forecast the company would earn $142.5 billion, or about 0.84 cents per share, according to FactSet.
