Amazon profits surge 35 per cent as AI investments drive growth

CTV News

a day ago

An Amazon Prime delivery person lifts packages while making a stop at a high-rise apartment building, Nov. 28, 2023, in Denver. (AP Photo/David Zalubowski)
Amazon reported a 35 per cent jump in quarterly profits Thursday as the e-commerce giant said major investments in artificial intelligence began paying off.
The Seattle-based company posted net profit of US$18.2 billion for the second quarter that ended June 30, compared with US$13.5 billion in the same period last year.
Net sales climbed 13 per cent to US$167.7 billion, beating analyst expectations and signaling that the global company was surviving the impacts of the high-tariff trade policy under U.S. President Donald Trump.
'Our conviction that AI will change every customer experience is starting to play out,' said Chief Executive Andy Jassy, pointing to the company's expanded Alexa+ service and new AI shopping agents.
Amazon Web Services (AWS), the company's world leading cloud computing division, led the charge with sales jumping 17.5 per cent to USS$30.9 billion.
The unit's operating profit rose to US$10.2 billion from US$9.3 billion a year earlier.
The strong AWS performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited major cloud providers as companies race to adopt generative AI technologies.
Despite the stellar results, investors seemed worried about Amazon's big cash outlays to pursue its AI ambitions, sending its share price more than three per cent lower in after-hours trading.
The company's free cash flow declined sharply to US$18.2 billion for the trailing 12 months, down from US$53 billion in the same period last year, as Amazon ramped up capital spending on AI infrastructure and logistics.
The company spent US$32.2 billion on property and equipment in the quarter, nearly double the US$17.6 billion spent a year earlier, reflecting massive investments in data centers and backroom capabilities.
Amazon has pledged to spend up to US$100 billion this year, largely on AI-related investments for AWS.
For the current quarter, Amazon forecast net sales between US$174.0 billion and US$179.5 billion, representing solid growth of 10-13 per cent compared with the third quarter of 2024.
Operating profit was expected to range from US$15.5 billion to US$20.5 billion in the current third quarter, which was lower than some had hoped for and likely also a factor in investor disappointment.