Results Beat Market Expectations
Amazon reported stronger than expected first quarter earnings and revenue, supported by faster growth in its cloud computing division and solid performance across advertising and online stores. The shares rose more than 4% in extended trading after moving unevenly immediately after the release.
The company posted earnings per share of 2.78 dollars, compared with analyst expectations of 1.64 dollars, according to LSEG. Revenue reached 181.52 billion dollars, above the 177.30 billion dollars expected by Wall Street.
AWS Delivers Its Fastest Growth In Years
Amazon Web Services remained the key focus for investors. Revenue in the cloud segment increased 28% year over year to 37.59 billion dollars, beating the 36.64 billion dollars expected by analysts polled by StreetAccount. The growth rate marked the division’s fastest expansion in more than three years.
The result is important because AWS sits at the center of Amazon’s artificial intelligence strategy. Investors have been watching whether demand for cloud infrastructure can justify the company’s aggressive capital spending plans, especially as major technology groups race to build the computing capacity required for AI workloads.
AI Spending Remains The Central Question
Amazon and other large technology companies are trying to demonstrate that heavy investment in artificial intelligence will translate into durable revenue growth. Industrywide AI spending could approach 700 billion dollars in 2026, while Amazon said in February that its capital expenditures could reach 200 billion dollars this year.
The company has recently announced AI related deals with OpenAI, Anthropic and Meta, which may help ease concerns about future returns. At the same time, those agreements suggest Amazon may need to keep expanding data centers and infrastructure to meet rising demand.
Cash Flow Falls As Investment Rises
Chief executive Andy Jassy highlighted Amazon’s position in what he described as one of the largest technology shifts of a generation. The company also emphasized its homegrown chips business as a potential beneficiary of the AI boom.
The investment push is already visible in the financials. Property and equipment expenses reached 44.2 billion dollars in the first quarter, above Wall Street’s estimate of 43.6 billion dollars, according to FactSet. Free cash flow for the past twelve months fell 95% year over year to 1.2 billion dollars, primarily because of AI investments, the company said.
Satellite Ambitions Add To Capital Needs
Amazon’s spending is also rising because of Leo, its developing internet from space service. Chief financial officer Brian Olsavsky said the company aims to begin commercial service in the third quarter of this year.
To build out the service, Amazon must manufacture enough satellites and secure additional rocket launches. The planned constellation is expected to total about 7,700 satellites, with roughly 270 currently in service. Earlier this month, Amazon announced plans to buy Globalstar in a deal valued at about 11.57 billion dollars, the second largest acquisition in its history.
Guidance Points To Continued Momentum
For the current quarter, Amazon expects revenue between 194 billion and 199 billion dollars, above the 188.9 billion dollars analysts had expected. The company projected second quarter operating income between 20 billion and 24 billion dollars, compared with analyst expectations of 22.65 billion dollars.
Online stores revenue rose 12% in the first quarter to 64.3 billion dollars, ahead of estimates of 62.7 billion dollars. Advertising revenue increased 24% year over year to 17.24 billion dollars, also topping expectations. The advertising unit remains one of Amazon’s fastest growing and more profitable businesses, driven largely by sponsored product placements on its e-commerce platform.
