Amazon.com Inc.’s quarterly sales and profit came in higher than expected on Thursday. However, the company said that cloud income growth was falling sharply as businesses struggled with an uncertain economy.
Chief Financial Officer Brian Olsavsky told traders on a conference call that Amazon Web Services (AWS) growth rates in April were about 5 percentage points lower than in the first quarter. Shortly after he spoke, Amazon shares lost about 12% of their after-hours gains to trade close to where they were at the end of the normal session.
Dennis Dick, a stock trader and market structure analyst at Triple D Trading, said, “The slowing of AWS growth is a sign for investors to take profits.” “I think AMZN is priced for perfection. If growth starts to slow, the stock will probably take a hit.”
As worries about the economy haven’t gone away, CEO Andy Jassy has tried to cut spending across all of Amazon’s many businesses.
Last month, he said that the company would cut jobs from its profitable cloud and advertising businesses. This means that Amazon has let go of 27,000 workers since November. It had about 1.47 million full-time and part-time workers at the end of the last quarter, a 10% drop from the quarter before. This drop was caused by changes in warehouse hiring.
The company has also stopped whole services, like when it announced on Wednesday that it would stop making Halo health trackers.
Amazon has tried to find new ways to make money while cutting costs. Olsavsky told reporters that the world economy was getting better at the same time that Amazon’s ad sales were going up.
“It’s good to see inflation going down there,” he said about foreign sales. It’s good to see that consumers’ trust is growing.”
“It’s good to see inflation going down there,” he said about foreign sales. It’s good to see that consumers’ trust is growing.”
He said that demand had stayed the same in North America, even though “you see signs that customers are looking for value” and “probably putting off some discretionary purchases.”
In the end, the online store made more money than expected in the first three months of the year, with sales of $127.36 billion. It expects to make between $127 billion and $133 billion in the second quarter.
Amazon’s future has been tied to that of AWS for a long time. In the first quarter, AWS’s growth slowed to 15.8% as businesses, afraid of a slowdown, watched how much they spent. The company said that was likely to go down even more.
Still, Olsavsky told reporters that Amazon had not seen any change in the way cloud companies competed with each other. His words came after Microsoft Corp. released a financial report this week that beat analysts’ expectations. The report showed that the Amazon competitor got more business thanks to AI.
“We like the basics of AWS and think there will be a lot of growth in the future,” Jassy said in a statement.
In the quarter that finished on March 31, Amazon made a net profit of $3.17 billion. This is a big change from the same time last year when it lost $3.84 billion.
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