On Thursday Eastern Time, the American e-commerce giant Amazon released a strong fourth-quarter financial report for fiscal year 2023. Financial reports showed that Amazon’s fourth-quarter revenue exceeded expectations, and new generative artificial intelligence (AIGC) capabilities in its cloud and e-commerce businesses spurred strong sales growth during the key holiday season. Investors were delighted with the results, with Amazon's stock price rising 8% after hours.
Diluted earnings per share were $1.00, a significant increase compared to diluted earnings per share of $0.03 in the same period last year.
The company's net sales will reach between US$138 billion and US$143.5 billion, a year-on-year increase of 8% to 13%;
Operating profit will be between $8 billion and $12 billion, compared with $4.8 billion in the same period in fiscal 2023.
The midpoint of Amazon's forecast range for first-quarter net sales was $140.75 billion, failing to meet analysts' expectations.
In a statement, Amazon Web Services CEO Andy Jassy praised the division's "continued long-term focus on customers and feature delivery," citing efforts to incorporate AIGC into many of its services.
On a conference call with analysts, Jassy said AI revenue is still relatively small, but he expects the technology to bring in tens of billions of dollars in revenue over the next few years. He said,
In the fourth quarter of last year, AWS' revenue was $24.2 billion, basically in line with analysts' expectations.
To strengthen its cloud business, Amazon is investing up to $4 billion in chatbot maker Anthropic. This move is also seen as Amazon’s response after Microsoft promised to invest US$10 billion in OpenAI, the parent company of ChatGPT.
Amazon CFO Brian Olsavsky said on the call that Amazon expects to increase capital expenditures this year to support AWS growth, including additional investments in AIGC and large language models.
According to data from VisibleAlpha, AWS's operating profit margin surged to nearly 30% in the fourth quarter of last year. But this is still far lower than the 48.2% profit margin of Microsoft's intelligent cloud business (including Azure services) in the fourth quarter of last year. Google Cloud's profit margin is 9.4%.
"All eyes will be on AWS, whose growth is accelerating modestly... leaving some lingering doubts about whether the cloud division can hold its own against competitors," said Sky Canaves, senior analyst at Insider Intelligence.
Amazon shares are up more than 6% this year and 41% over the past 12 months. The stock soared 81% in 2023 and became one of the giant stocks that helped boost the S&P 500 index last year.
Andy Jassy said in a statement: "The regionalization of our U.S. delivery network allows us to provide Prime members with the fastest delivery speed ever, while also reducing the cost of our services." The implementation of this strategy not only improves consumers' shopping experience, but also helps Amazon reduce delivery costs and time.
Despite its strong performance, Amazon cut jobs in several divisions earlier this year. Amazon, like other technology rivals, went on a hiring spree during the pandemic, and by last year, as the impact of the pandemic receded, the company cut more than 27,000 jobs.
"We're just coming off a period of heavy hiring," Olsavsky told reporters on a conference call.
"There's a general feeling across most teams that we're struggling to keep headcount under control."