Amazon delighted Wall Street on Thursday with a net profit of $9.9 billion in the third quarter, three times more than in summer 2022 and $3 billion more than the market expected, thanks to a strong recovery in sales on its platform.
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According to an earnings release, the online sales giant achieved sales of $143 billion (+13%) from July to September, also exceeding forecasts.
Its shares rose nearly 3% in electronic trading after the market closed.
Operating profit, a key indicator of profitability, increased fourfold to $11.2 billion, instead of the $7.7 billion analyst consensus expected.
Andy Jassy, Amazon boss, welcomed these achievements and attributed them to a logistical reorganization in the USA.
“The benefits of moving from a single national fulfillment network in the United States to eight different regions exceed our expectations and, perhaps most importantly, allow us to deliver the fastest delivery speeds for Prime customers in our 29-year history,” he said the release.
Amazon.com benefited this summer from a day of sales for its subscribers to its Prime service, which offers benefits such as faster and free deliveries.
Cloud
This marketing measure benefits the high-margin advertising business. As a result, sales increased by 26% to $12 billion.
Amazon, like other tech giants, had a difficult 2022 as consumers returned to physical stores after the pandemic. It ended with mass layoffs in early 2023.
Since then, the platform has “slowly regained momentum,” commented Insider Intelligence analyst Andrew Lipsman. “The third quarter results are an important test of how quickly the company can turn things around” in an economic context characterized by inflation.
Investors also waited impatiently for results from AWS, Amazon’s “cloud” (remote computing) arm, whose growth has slowed.
AWS generated revenue of $23 billion (+12%) in the third quarter.
As the global market leader in the cloud sector, Amazon appears to be ideally positioned in the race for artificial intelligence (AI), which requires a lot of computing power.
However, the Seattle-based company has fallen behind the other two major players in this market, Microsoft and Google, which use generative AI tools extensively, particularly in their search engines and office software.
“There is no team, no activity at Amazon that is not currently working on generative AI applications,” promised Andy Jassy in August.
Generative AI
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 with 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 Claude developed, a competitor to ChatGPT, the wildly popular OpenAI interface (including Microsoft as a major shareholder).
Microsoft and Google also reported whopping sales and profits this week that exceeded expectations.
But Google’s “Cloud” disappointed with third-quarter revenue of $8.4 billion (+22% year-on-year), below analysts’ forecasts, while Microsoft pleased with 29% thanks to the acceleration in growth of its Azure platform was.
For the current quarter, the year-end holiday quarter, Amazon expects sales of between 160 and 167 billion dollars.
The group is regularly recognized by authorities and associations for its methods of maximizing its growth.
More than two-thirds of Amazon warehouse workers surveyed have stayed home without pay to recover from work-related pain or fatigue, according to a study released Wednesday by the University of Illinois.
And at the end of September, the US competition authority and 17 states filed a complaint against the company, accusing it of illegally maintaining its monopoly thanks to “illegal methods to exclude competitors”.