Amazon.com reported earnings for the first quarter that exceeded Wall Street expectations amid cost-cutting measures by the ecommerce giant. Amazon shares fell during extended trading after the management's comments on its earnings call raised concerns about how long cloud computing growth would continue to slow.
Amazon Web Services' first quarter sales rose by 16%, to $21.4 billion. This is a slowdown from the 37% increase in the previous period. Analysts expected AWS to grow by 15% in the March quarter.
Amazon Web Services has seen a slower growth rate in April than Q1 according to the Amazon earnings call.
How long will cloud slowdown last?
This frightened investors, as Wall Street analysts had predicted that AWS revenue growth would "trough" during the June quarter 2023 and then slowly accelerate. If the U.S. falls into recession, AWS could slow down later. The three major cloud computing companies hope that artificial intelligence workloads can eventually spur a recovery.
Amazon's stock initially rose 12% after the first earnings announcement in extended trading. Investors tempered their excitement. Stocks fell 2% today to 107.57.
Amazon reported earnings after the close of the market. The adjusted figure was 31 cents per share.
AMZN's revenue grew 9%, to $127.4 Billion. Analysts expected Amazon to post earnings of 21 cents per share on revenue $124.6 billion.
Amazon Stock: Cost-cutting Moves
Ad revenue increased 23%, to $9.51 Billion. This was well above the $9.05 Billion estimate.
Amazon's mid-point forecast for the June quarter revenue is $130 billion, which is in line with analyst expectations.
Amazon also said that it expected second-quarter operating earnings of $3.8 billion, which is below the analyst expectations of $4.4 billion.
Amazon announced in January that it would cut 18,000 jobs, the biggest reduction ever seen by the company. In March, Amazon announced that it would cut another 9,000 positions.
Amazon's shares were up by 25% before the earnings report. According to IBD Stock Checkup, Amazon stock has a Relative strength rating of 43 out a maximum possible 99.