(San Francisco) Amazon tripled its net profit to $9.9 billion in the third quarter, thanks to the performance of its platform and delivery network, but its cloud business appears increasingly threatened by the rise of its neighbor Microsoft.
Its profits, 3 billion higher than analysts’ forecasts, delighted the market. The Seattle group’s stock gained nearly 5% during electronic trading after the stock market closed on Thursday.
In total, the online sales giant achieved a turnover of 143 billion dollars (+13%), a figure also higher than forecasts, according to a results press release.
Andy Jassy, the boss of Amazon, welcomed these performances and attributed them to a logistics reorganization in the United States, which made it possible to “achieve the fastest delivery speeds for Prime customers in 29 years of history.”
And “we are far from running out of ideas to improve costs and speed,” he added during a conference call.
Amazon.com benefited from a day of sales this summer for its subscribers to its Prime service, which provides advantages such as free deliveries within 24 hours.
This marketing operation also benefits its high-margin advertising activity. This saw its revenues increase by 26%, to $12 billion.
Cloud
Amazon, like other tech giants, had a difficult 2022 as consumers returned to physical stores after the pandemic. It concluded with large-scale layoffs at the start of 2023.
With its summer results, the American group “exploded expectations”, reacted Zak Stambor, analyst at Insider Intelligence.
“Its slowdown last year appears to be in the rearview mirror, thanks in part to significant cost reductions throughout the year and more focus on key growth areas, such as its e-commerce platform, services paid for third-party sellers and advertising.
Its operating profit, a key indicator of profitability, was multiplied by 4, to 11.2 billion dollars, instead of the 7.7 billion expected by the consensus of analysts.
But AWS, the cloud (remote computing) arm of Amazon, achieved $23 billion in revenue in the third quarter, or 12% growth.
Microsoft and Google, which also published turnover and profits above expectations this week, recorded much greater progress in this area.
The Windows group delighted the market thanks to the acceleration of the growth of its Azure platform, to 29%. As for Google, even if its cloud disappointed with $8.4 billion in quarterly revenues, they nevertheless increased by 22% year-on-year.
Amazon may be the world number one in the cloud, ahead of these two competitors, “AWS is seriously threatened by the growing domination of Microsoft,” notes Zak Stambor.
“Its cloud has benefited from its investments in generative artificial intelligence (AI). Google faces a similar challenge.”
Generative AI
Amazon has undertaken to catch up on this market which will become extremely buoyant in 2023 thanks to the success of ChatGPT, the very popular OpenAI interface (of which Microsoft is a major shareholder).
Its voice assistant Alexa will soon be able to compose messages to send to a contact or recipes based on the ingredients in the user’s fridge, all on a simple verbal command in the living room or kitchen.
The company also announced in September an investment of up to $4 billion in AI startup Anthropic, which developed Claude, a competitor to ChatGPT.
Andy Jassy assured that AWS’s generative AI platform, Bedrock, was also very successful with developers.
But for now, Microsoft and Google are leading the race with the all-out deployment of new tools on their search engines and office software, in particular.
For the current quarter, Amazon expects sales of between $160 billion and $167 billion.
But the holiday season could be overshadowed by controversies linked to the company.
More than two-thirds of Amazon warehouse workers surveyed have already stayed home without pay to recover from work-related pain or exhaustion, according to a study released Wednesday by the University of Illinois.
And at the end of September, the American competition authority and 17 states filed a complaint against the group, accusing it of “illegally maintaining its monopoly” thanks to “illegal methods to exclude competitors”.