Amazon shares slid in after-hours trading Thursday after it missed Wall Street’s revenue expectations in its second-quarter earnings report.
The retail and cloud giant reported revenue of $148 billion for the second quarter of 2024, a 10% increase from the previous year. The company was expected to report revenue of $148.7 billion, according to FactSet analysts. Meanwhile, Amazon reported net income of 13.5 billion in the second quarter, while it was expected to report $11 billion.
The company’s cloud-computing division, Amazon Web Services, reported $26.3 billion in revenue for the second quarter — up 19% year-over-year and beating analyst estimates. Meanwhile, its advertising sector reported $12.8 billion in revenue.
Amazon beat Wall Street’s expectations in its first-quarter earnings, which were boosted both by its advertising service and AWS. The cloud division’s sales rose 17% year-over-year to $25 billion in the first quarter.
“We’re continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth,” said Andy Jassy, Amazon president and chief executive.
Meanwhile, Amazon issued lower-than-expected guidance for its third quarter, expecting revenue to be between $154 and $158.5 billion, or growth between 8% and 11% year-over-year.
The expected surge in the AWS division gives Amazon an edge as its competitors, such as Microsoft and Google, continue to put big money into the artificial intelligence space.
In April, Jassy outlined how the company is focusing on the technology in his annual letter to shareholders. Jassy said Amazon is “optimistic that much of this world-changing AI will be built on top of AWS.” Earlier this year, Amazon completed its $4 billion investment in AI startup Anthropic, its largest investment in an outside company ever, as it steps up its efforts against rivals.
However, Amazon’s plans for an AI-powered version of its virtual-assistant, Alexa, are reportedly not close to being ready. The company disputed doubts of its current Alexa AI efforts, and said its Artificial General Intelligence team has access to the company’s in-house chips, Trainium and Inferentia, and Nvidia’s graphics processing units, or GPUs.
Amazon’s stock is up around 22.7% this year.
