Amazon Talks Up AWS Strength, AI As Overall Sales Growth Slows
Amazon reported Q1 sales that narrowly topped estimates and guided below consensus for current-quarter growth in results released after the bell on Tuesday afternoon in the US.
On the face of it, the top-line wasn't especially impressive. $143.3 billion's a big number (and it matched the top-end of the company's guide from last quarter), but it didn't count as a big beat. Consensus was looking for $142.6 billion.
Growth of 13% was a slight downshift from the holiday quarter. Andy Jassy called
A glass half empty analysis, comme toujours.
Very interesting report. Unlike some peers, AWS does not have tougher comps ahead. Comps in 2Q are 360bp easier than 1Q, and stay about the same through 2024. So AWS may be more likely to sustain or accelerate growth in coming quarters than, say, MSFT Cloud. AMZN’s profitability gains look like a trend not a blip, since high margin revenue (AWS, ads, subscriptions) are 33% of revenue gaining 2 points internal share annually, and AMZN leveraged every reported expense line – even depreciation. Capex hinted at over $60BN this year – but that’s what AMZN spent in 2021 and 2022, so a standard investment cycle for them. FCF is returning to traditional strong levels, FCF/net income =130% L4Q, and even with capex and debt paydown to net cash by year-end, some very excess levels of cash look likely in the coming year or so. AMZN historically doesn’t, and cannot (FTC etc), make mega-acquisitions. It historically has not been a big share repurchaser – what happens if it becomes one and initiates a dividend too?