Amazon’s profit trajectory hit a speed bump on Thursday in the US when the company reported a US$3.8 billion net loss and slowing growth, but the tech giant didn’t disappoint with one of its core businesses: its cloud computing unit.
Amazon Web Services reported that its net sales were US$18.4 billion in Amazon’s first fiscal quarter, up 37 percent year over year, representing an annualized sales run rate of nearly US$74 billion, said the company’s chief financial officer, Brian Olsavsky, in an earnings conference call Thursday in the US.
Olsavsky said that customers such as Telefonica, Verizon, Boeing, MongoDB, Amdocs, Bundesliga, Maple Leaf Sports and Entertainment, the National Hockey League, and Thread announced new agreements and service launches supported by cloud leader AWS.
Olsavsky said that Amazon had spent US$61 billion on capital investments in the trailing 12-month period ending March 31, adding that 40 percent of that spending was aimed at infrastructure, primarily supporting AWS, “but also supporting our sizable consumer business.”
AWS reported operating income of US$6.5 billion for the recent quarter, compared to US$4.2 billion for the same period a year before.
Still, Amazon stock sunk more than 13 percent Friday to US$2,497 a share.
Overall, Amazon reported net sales increased 7 percent to US$116.4 billion in the first quarter, compared with US$108.5 billion in the same period in 2021. That figure missed Zacks’ estimated net sales of US$117.02 billion for the quarter, contributing to Amazon’s “slowest-ever revenue growth,” Zacks said.
Olsavsky also pointed out Amazon’s overall net loss of US$3.8 billion included a pre-tax valuation loss of US$7.6 billion included in nonoperating expense from Amazon’s common stock investment in electric vehicle maker Rivian Automotive. Ford, another Rivian investor, reported a US$3.1 billion loss due to its Rivian investment. Rivian stock is down about 69 percent so far this year.
The firm is forecasting second quarter net sales to between US$116 billion and US$121 billion, or growth of between 3 percent and 7 percent compared with second quarter 2021