AWS growth climbs to 28% as Amazon’s big AI bets start to pay off

Amazon Web Services growth accelerated to 28% in the first quarter — its fastest pace in nearly four years — pushing Amazon’s results past Wall Street’s expectations and validating, at least for now, the company’s controversial $200 billion capital spending plan.

Overall, Amazon posted sales of $181.5 billion, up 17%, and operating income of $23.9 billion, up 30%. Both topped guidance and exceeded Wall Street’s expectations of about $177 billion in revenue.

Profits were $30.3 billion, or $2.78 per diluted share. However, that included a $16.8 billion pre-tax gain on Amazon’s investment in Anthropic, which inflated the bottom-line numbers. Excluding that one-time gain, adjusted earnings per share would have been $1.61, just shy of analyst expectations of $1.62.

Amazon’s advertising business grew 24% to $17.2 billion in the quarter, and the company said advertising revenue topped $70 billion over the past 12 months.

In the core e-commerce business, unit sales grew 15%. Amazon CEO Andy Jassy called it the strongest growth rate since the waning days of the COVID-19 lockdowns. It was boosted in part by faster delivery, with more than 1 billion items shipped same-day or overnight in the U.S. so far this year.

Amazon is in “the middle of some of the biggest inflections of our lifetime,” Jassy said in a release.

The company spent $147.3 billion on property and equipment over the past 12 months, nearly doubling from $88 billion a year earlier and leaving just $1.2 billion in free cash flow.

In other words, Amazon is making more money than ever but plowing nearly all of it back into building out capacity, mostly for AWS and AI infrastructure. The company has said it expects to spend about $200 billion in capital expenditures for the full year.

Shares were down about 2% in initial after-hours trading.

Update: On the earnings call, Amazon disclosed that its AWS revenue backlog jumped to $364 billion, up from $244 billion last quarter. That figure does not include a recently announced deal with Anthropic valued at more than $100 billion. Jassy said the backlog has reasonable breadth beyond just one or two customers.

Jassy also disclosed that Amazon now has more than $225 billion in revenue commitments specifically for Trainium, its custom AI chip. He called Amazon’s custom silicon business one of the top three data center chip businesses in the world and said the chips business grew nearly 40% from the prior quarter.

For the second quarter, Amazon expects revenue between $194 billion and $199 billion, with operating income between $20 billion and $24 billion. The guidance assumes Prime Day will take place in Q2 in most countries, a shift from Q3 last year.

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