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Amazon CEO cites enterprise shift in cloud spending priorities for upbeat Q2 results

After a succession of downbeat quarterly results, Amazon's Q2 figures suggest a return to form

Amazon CEO Andy Jassy has credited a shift in its customers’ cloud-spending priorities as playing a pivotal role in helping the e-commerce giant post a better than expected set of second quarter results.

The results period, which covers the three months to 30 June 2023, saw Amazon report a revenue of $134.4bn for Q2, which constitutes a year-on-year (YoY) increase of 11%. The company also posted an operating profit of $7.7bn, compared to $3.3bn a year ago.

The results exceeded expectations, with Jassy confirming on a conference call to discuss the results with the analyst community that its Q2 performance had “exceeded the top end of our guidance ranges”.

“We’re encouraged by the progress we’re making on several key priorities, namely: lowering our cost to serve in our stores business, continuing to innovate on and improve our various customer experiences, and building new customer experiences that can meaningfully change what’s possible for customers in our business long term,” said Jassy, during the call, transcribed by Seeking Alpha.

According to Amazon’s figures, the company’s cloud arm was responsible for generating 70% of the operating profit the company accrued during the quarter at $5.4bn, with Jassy citing the performance of AWS as a key factor in the “strong quarter of progress” the company experienced during Q2.

AWS also chalked up revenue of $22.1bn during the second quarter, which was up 12% on the previous year, but this still constitutes a markedly slower growth rate than the company has historically reported.

For context, AWS reported an annual revenue growth rate of 33% during Q2 2022, with the company previously blaming the slowdown on enterprises looking to optimise their existing cloud workloads, rather than take on more cloud capacity, due to economic pressures.

Even so, Jassy said in a press statement accompanying the results, the performance of AWS appears to be levelling out, which is positive news for Amazon’s wider business.     

“Our AWS growth stabilised as customers started shifting from cost optimisation to new workload deployment, and AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative [artificial intelligence] AI releases that make it much easier and more cost-effective for companies to train and run models, customise large language models to build generative AI applications and agents, and write code much more efficiently,” said Jassy.  

During the analyst call, Jassy went on to talk further about the opportunities he sees for AWS to capitalise on the growing demand from enterprises for generative AI offerings, and predicts the firm will become “customers’ long-term partner of choice” for these types of projects in the years to come.

“What we’re doing is democratising access to generative AI, lowering the cost of training and running models, enabling access to large language model of choice instead of there only being one option, making it simpler for companies of all sizes and technical acumen to customise their own large language model and build generative AI applications in a secure fashion,” said Jassy.

“These are all part of making generative AI accessible to everybody and very much what AWS has been doing for technology infrastructure over the last 17 years.”

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