Amazon doubles profits thanks to AI and cloud, but lags behind the competition

Amazon doubles profits thanks to AI and cloud, but lags behind the competition

Driven by the cloud and artificial intelligence, US commerce and technology company Amazon doubled its quarterly profit, but disappointed in its core business, while the market expects a solid performance from technology groups investing billions of dollars in generative artificial intelligence (AI).

The online shopping giant announced that in the second quarter it achieved income of 148 billion dollars, which is an increase of 10 percent compared to the same period last year, but slightly lower than analysts’ forecasts.

Its net profit was 13.5 billion, twice as much as a year ago, thanks to the high margins of cloud activities.

Amazon shares lost more than 5 percent in electronic trading after the New York Stock Exchange closed on Thursday.

“We continue to make progress in many areas, but especially in the continued re-acceleration of the growth of AWS (business in the cloud),” said group head Andy Jessy.

Backlog of Amazon

Revenues from AWS rose 19 percent to $26.3 billion, with that subsidiary making an operating profit of $9.3 billion (a key indicator of profitability), or two-thirds of the group’s total of $14.7 billion.

World number one in the cloud, Amazon however, has lagged behind in AI compared to the other two giants in the sector, Microsoft and Google.

Two companies are leading the race in designing models and applications that can generate text, images and other content at a simple question.

The cloud is essential to the deployment of these tools for businesses and individuals, hence the heavy investment in new ad-hoc data centers.

Amazon, uspeh (AP Photo/Mark Lennihan, File)

Investments in AI

However, high costs worry shareholders, who want to see commensurate commercial returns quickly.

“While we are investing significantly in AI and infrastructure, we would like to have more capacity than we already have today,” Jesse said Thursday night during a conference call with investors.

“We are investing a lot in AI and will continue to do so,” he said.

Amazon warned in April that investments would increase, on top of the $14 billion already spent in the first quarter, mostly on AWS and AI.

However, the technology “already represents an annual income of several billion dollars”, said Džesi.

“AWS’s strategic investments in artificial intelligence, to defend its advantage over Microsoft and Google in the cloud, have been well received by the market,” said an Amazon expert.

Source: Beta

Photo: AP Photo/Michel Spingler, Screenshot YT, AP Photo/Mark Lennihan