Amazon profit climbs as cloud promises boon

Global e-commerce giant Amazon has said that it's profit surged in the recently ended quarter on growing sales and more efficient deliveries, with its cloud business promising even better days ahead.

The e-commerce colossus said it made a profit of $9.9 billion on sales that tallied $143.1 billion in the recently ended quarter, with more than half its operating income made from Amazon Web Services (AWS) cloud unit.

Google parent Alphabet and computing colossus Microsoft this week reported rising quarterly profits, playing up demand for cloud computing enhanced with artificial intelligence.

Investors, though, had hoped for better performance from Google Cloud causing the company's shares to slip.

While Amazon Web Services (AWS) grew 12% when compared to the same quarter a year earlier, the unit's growth lagged that by rival cloud businesses operated by Microsoft and Google.

"I remain very optimistic about AWS," Amazon chief executive Andy Jassy said on an earnings call.

"There's a lot more there for us; then you look at the very substantial, gigantic new generative AI opportunity, which I believe will be tens of billions of dollars in revenue for AWS over the next several years."

Amazon just weeks ago said it would invest up to $4 billion in AI firm Anthropic.

The success of OpenAI's ChatGPT, a chatbot released last year that is able to generate poems, essays and other works with just a short prompt, has led to billions being invested in the field.

Anthropic agreed to use Amazon's chips to develop its next models and to use AWS for "mission critical workloads."

Amazon has already announced it aimed to soup up its Alexa voice assistant with generative AI, which the firm said would allow users to have smoother conversations.

Retail rebound
Amazon earnings "soared past expectations" in the quarter, according to Insider Intelligence analyst Zak Stambor.

"We had a strong third quarter as our cost to serve and speed of delivery in our stores business took another step forward," Jassy said, adding its ad business grew "robustly" and AWS cloud computing business "continued to stabilize."

"The retail giant's slowdown last year appears to be in the rearview mirror as it has embarked on significant cost-cutting throughout this year and sharpened its focus on key growth areas, such as its high-margin online marketplace and advertising," Stambor said.

A top US antitrust regulator sued Amazon in September, accusing the online retail behemoth of running an illegal monopoly by strong-arming sellers and stifling potential rivals.

"Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies," said Federal Trade Commission Chair Lina Khan.

Robots and drones
Amazon said Thursday it will hire 250,000 full-time, part-time and seasonal employees in the United States to handle shopping demand in the months ahead.

Amazon said last week that it will expand drone delivery of certain purchases to a third US state as well as to Britain and Italy by the end of 2024.

The US firm has installed a new robotics system in one of its Texas logistics centers, featuring technology like automated vehicles, mechanical arms and computer vision technology.

Amazon already uses 750,000 robots in its warehouses to speed up deliveries.

"The better they get at delivery, the more it continues to grow the e-commerce market overall and Amazon's place within that market," said Insider Intelligence analyst Andrew Lipsman.

But increased productivity via robots won't fix underlying Amazon worker issues, critics say.

Amazon early this year eliminated some 27,000 jobs in a move it said at the time was necessary, after years of sustained hiring.

Ads shine
Advertising continues to be "a major bright spot" for Amazon and it has started using generative artificial intelligence to help sellers create "eye-catching" ads in its online marketplace, analyst Stambor said.

Insider Intelligence expects Amazon US advertising business to bring in nearly $34 billion this year in a major leap from before the Covid-19 pandemic.