Amazon’s cloud margin widens on accelerating revenue growth

Amazon
said
Tuesday
that
revenue
from
its
cloud
unit
grew
17%
year
over
year
in
the
first
quarter,
a
more
rapid
rate
than
Wall
Street
had
expected.

Revenue
from
Amazon
Web
Services
came
out
to
$25.04
billion,
according
to
the
company’s

earnings
statement.
Analysts
surveyed
by
StreetAccount
had
been
expecting
$24.49
billion.
The
growth
marked
a
step
up
from
the
13%
increase
Amazon
reported
for
AWS
in
the

fourth
quarter.

While
Amazon
remains
mostly
an
online
retailer,
the
company
has
become
a
major
entity
in
information
technology,
supplying
large
companies,
startups
and
governments
with
computing
resources,
database
software
and
networking
services.
AWS
accounts
for
17%
of
Amazon’s
$143,313
billion
in
overall
revenue.

Cloud
is
also
a
reliable
source
of
profit
for
Amazon,
thanks
to
high
software
margins.
AWS
delivered
$9.42
billion
in
operating
income,
or
about
62%
of
Amazon’s
total.
Analysts
polled
by
StreetAccount
had
expected
$7.52
billion
in
AWS
operating
income.
The
AWS
operating
margin
widened
to
37.6%,
the
widest
at
least
since
2014.

Last
week,


Google
and


Microsoft
both
reported
accelerating
cloud
growth.
Amazon
remains
bigger
than
both
in
the
market,
which
is
becoming
larger
more
quickly
than
other
areas
of
information
technology,
including
devices
and
data
center
systems,
according
to
industry
researcher

Gartner.

During
the
quarter,
Amazon

said
it
had
completed
a
$4
billion
investment
in
startup
Anthropic,
which
is
relying
on
AWS
chips
for
training
artificial
intelligence
models.
Adam
Selipsky,
the
CEO
of
AWS,
told

Axios
in
an
interview
that
Anthropic
offers
the “leading
models
in
the
market
right
now”
in
some
areas.
Google,
which
invested
in
Anthropic
earlier,
offers
its
own
AI
models,
as
does
Microsoft-backed
OpenAI.

“We’ve
accumulated
a
multibillion-dollar
revenue
run
rate
already,”
Andy
Jassy,
Amazon’s
CEO
and
formerly
the
head
of
AWS,
said
on
a
conference
call
with
analysts,
speaking
of
generative
AI.
Analysts
presume
that
Microsoft
has
billions
in
annualized
cloud
revenue
tied
to
AI
as
well.

Amazon
saw
further
reductions
in
cloud
optimization
efforts
during
the
quarter,
after
many
organizations
sought
to
make
the
most
of
their
cloud
spending,
Brian
Olsavsky,
the
company’s
finance
chief,
said
on
the
call.

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