NEW YORK (AP) – Amazon reported profits and sales for the first quarter that exceeded analysts’ expectations, showcasing the online giant’s ability to retain shoppers looking for a broad range of choices at low prices in an uncertain economic climate.
The Seattle-based firm also disclosed strong growth rates in sales for its well-known cloud computing division, Amazon Web Services, despite the market being closed on Thursday.
However, President Donald Trump’s unpredictability regarding tariffs and consumer spending has cast a shadow over Amazon’s future outlook.
Trump’s erratic trade policies, including a steep 145% tariff on Chinese imports, pose a threat to businesses, potentially raising prices and impacting consumers. Yet, larger corporations like Amazon are anticipated to handle the economic pressures more effectively than smaller retailers.
In an effort to mitigate the effects of impending tariffs, Amazon, along with various major retailers and suppliers, has expedited the importation of foreign goods. Andy Jassy, Amazon’s President and CEO, informed analysts that many third-party sellers have employed similar strategies. As a result, a significant number of third-party sellers have yet to adjust their pricing, he noted.
Jassy pledged that Amazon would do everything possible to maintain low prices. While he acknowledged the challenges that lie ahead, he emphasized Amazon’s extensive selection model as a means to navigate this evolving landscape.
“In times of uncertainty, customers tend to gravitate toward the provider they trust most,” Jassy shared with analysts. “With our expansive selection, competitive pricing, and swift delivery, we have gained relative market share during these uncertain times, positioning ourselves favorably for the future.”
On Friday, Trump addressed a Trade exemption, allowing certain low-value shipments from China to bypass tariffs. This exemption is advantageous for e-commerce businesses operating out of China, such as Shein and Temu.
New tariffs could provide Amazon with an advantage by increasing the operational costs of its competitors. However, they would also affect Chinese sellers who connect with American customers through Amazon’s platform. Additionally, it could elevate prices on the recently launched online storefront, which facilitates direct shipping of low-cost products from China. This service, known as Amazon Haul, was Amazon’s response to platforms like Shein and Temu.
Amazon reported earnings of $17.13 billion, or $1.59 per share, for the quarter ending March 31, an increase from $10.43 billion (98 cents per share) during the same quarter last year.
Revenue grew by 9%, reaching $155.7 billion, up from $143.3 billion in the same quarter last year.
Amazon Web Services revenue increased by 17% in the first quarter, amounting to $29.3 billion.
Amazon continues to be a significant player in the race for generative artificial intelligence. Like other tech giants, it is ramping up technology investments, spending billions on expanding data centers that support AI and cloud computing. The company is also investing in its proprietary computer chips, as well as those developed by Nvidia, and has expanded its own AI model while integrating generative AI into other parts of the business.
In the first quarter, Amazon noted expenditures of $25.02 billion, with over $14.92 billion allocated to real estate and equipment in 2024 compared to the same period the previous year.
Recently, Amazon announced a $4 billion investment through 2026, aimed at enhancing its rural delivery network to ensure prompt deliveries in low-density areas across the United States.
The company anticipates revenue to be between $159 billion and $164 billion in the second quarter. Analysts forecasted $161.2 billion, according to FactSet.
A projected operating profit for the second quarter is estimated to range from $13 billion to $17.5 billion, while analysts are looking for $17.6 billion, according to FactSet.
Following these announcements, Amazon’s shares dropped by more than 2% in after-hours trading on Thursday.
Source: apnews.com