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For a tech giant in the midst of an AI boom, Amazon has been struggling. Relatively speaking. Joe Ciolli, my First Trade workbud, recently noted Amazon has been the worst Mag 7 performer over the past five years, and even lags the broader market.
But that was yesterday morning. Later on Thursday, Amazon reported some pretty spicy quarterly results.
AWS growth topped 20%, the fastest since 2022. As you can see from the chart below, cloud competition has been the main concern, so this number was a relief.
“We continue to see strong demand in AI,” Amazon CEO Andy Jassy said. Translation: Flex, we’re still the cloud boss. While AWS lags based on percentage growth, it’s still much bigger than Azure and Google Cloud.
What about the rest of Amazon’s empire? Total revenue beat estimates, and profit margins hit a record 12%. Analyst Mark Mahaney summed the results up with one word: “Boom!!!”
Those last two numbers might be even more important than the cloud print. Amazon chopped 14,000 jobs earlier this week. That set up two scenarios ahead of earnings: either the company was worried and cutting costs to adjust to slower growth, or AI is making customers — and Amazon itself — more efficient, so fewer employees are needed.
The combination of strong revenue growth and record profitability suggests scenario two may be starting to play out. If that’s true, it’s a warning sign for white-collar workers everywhere.
“AI is going to reorient the global economy,” ServiceNow CEO Bill McDermott told me this week. That started with consumers, but it’s beginning to spread across corporate operations in profound ways, he explained.
Jassy danced around this on a conference call with analysts late Thursday. But I’ll let you decide what he’s messaging here!
“The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven,” the CEO said. “Not right now at least.”
Need any more clues? Here’s Amazon’s HR chief this week, explaining those 14,000 job cuts: “This generation of AI is the most transformative technology we’ve seen since the internet, and it’s enabling companies to innovate much faster than ever before.”
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