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Amazon stock fell as revenue, revenue beat through cost cutting




Amazon.com ( AMZN ) on Thursday reported first-quarter earnings that topped Wall Street estimates due to cost-cutting by the e-commerce giant. Amazon shares fell in extended trading as management’s earnings call comments raised questions about how long a slowdown in cloud computing growth will last.




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First-quarter sales for its cloud computing unit, Amazon Web Services, rose 16% to $21.4 billion, slowing from 37% growth in the same period last year. Analysts had projected AWS growth of 15% for the March quarter.

On the Amazon earnings call, management said Amazon Web Services is seeing lower growth in April compared to Q1.

AMZN stock: How long will the slowdown in the cloud last?

That spooked investors because Wall Street analysts have expected AWS revenue growth to “bottom out” in the June 2023 quarter, then slowly accelerate. But if the US economy falls into a recession, AWS’s decline could bottom out later. The big three cloud computing giants are hoping that artificial intelligence workloads will eventually spark a boom.

Amazon shares initially rose 12% on the first earnings report in extended trading. But investors tempered their enthusiasm. Shares fell 2% to 107.57 in last action on the stock market today.

Reported after the market closed, Amazon earnings were 31 cents per share on an adjusted basis.

Revenue for AMZN stock rose 9% to $127.4 billion. Meanwhile, analysts expected Amazon to report earnings of 21 cents per share on revenue of $124.6 billion.

Amazon stock: Savings for cost savings

Advertising revenue rose 23% to $9.51 billion, beating estimates of $9.05 billion.

Amazon forecast June revenue of $130 billion at the midpoint of its outlook, in line with analyst estimates.

Amazon also said it expects second-quarter operating income of $3.8 billion at the midpoint of its outlook, below analyst estimates of $4.4 billion.

In January, Amazon said it would lay off 18,000 workers, the biggest cut in its 28-year history. In March, it announced plans to cut another 9,000 jobs.

Heading into Amazon’s earnings report, shares of the e-commerce giant rose 25% in 2023. Amazon stock has a relative strength rating of 43 out of a possible 99, according to IBD Stock checkup.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on wireless 5G, artificial intelligence, cyber security and the cloud.

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