On Thursday Eastern Time, US e-commerce giant Amazon released a strong fourth quarter financial report for the 2023 fiscal year.
The financial report shows that Amazon's fourth quarter revenue exceeded expectations, and the new features of Generative Artificial Intelligence (AIGC) in its cloud and e-commerce businesses stimulated strong sales growth during the critical holiday season. Investors were delighted with this result, and Amazon's stock price rose by 8% after trading.
According to the financial report,
Amazon's net sales in the fourth quarter were $169.961 billion, an increase of 14% compared to $149.04 billion in the same period last year. Excluding the impact of exchange rate fluctuations, it increased by 13% year-on-year;
The net profit was 10.624 billion US dollars, a significant increase of over 37 times compared to the same period last year's net profit of 278 million US dollars;
Diluted earnings per share were $1.00, a significant increase from $0.03 in the same period last year.
Amazon predicts that in the first quarter of fiscal year 2024
The company's net sales will reach between $138 billion and $143.5 billion, a year-on-year increase of 8% to 13%;
The operating profit will reach between $8 billion and $12 billion, while the operating profit for the same period in fiscal year 2023 is $4.8 billion.
The median expected range for Amazon's first quarter net sales was $140.75 billion, which did not meet analyst expectations.
The boost brought by artificial intelligence will continue to grow
Andy Jassy, CEO of Amazon Web Services Cloud Computing (AWS), praised the department's "continued long-term focus on customer and feature delivery" in a statement, and mentioned efforts to incorporate AIGC into many of its services. He emphasized that these new features are starting to be reflected in our overall performance.
During a conference call with analysts, Jia Xi stated that the revenue from artificial intelligence is still relatively small, but he expects this technology to bring in billions of dollars in revenue in the coming years. He stated that almost all consumer businesses operated by Amazon already have or will have generative artificial intelligence products.
In the fourth quarter of last year, AWS's revenue was $24.2 billion, which basically met analysts' expectations.
In order to strengthen its cloud business, Amazon is investing up to $4 billion in chatbot manufacturer Antiopic. This move is also seen as Amazon's response after Microsoft promised to invest $10 billion in ChatGPT's parent company OpenAI.
Amazon CFO Brian Olsavsky stated during a conference call that Amazon expects capital expenditures to increase this year to support AWS growth, including additional investments in AIGC and large language models.
According to Visible Alpha's data, AWS's operating profit margin surged to nearly 30% in the fourth quarter of last year. But this is still far below the profit margin of 48.2% for Microsoft's intelligent cloud business (including Azure services) in the fourth quarter of last year. Gu Geyun's profit margin is 9.4%.
"All eyes will be focused on AWS, and its growth is slowly accelerating... This has raised some lingering doubts about whether the cloud computing department can stand firm in the hands of competitors," said Sky Canaves, senior analyst at Insider Intelligence.
Layoffs are still ongoing
Amazon's stock price has risen by over 6% this year, and has risen by 41% in the past 12 months. The stock surged 81% in 2023 and became one of the giant stocks that helped drive the S&P 500 index up last year.
Andy Jesse stated in a statement, "The regionalization of our US distribution network has enabled us to provide Prime members with the fastest delivery speed in history, while also reducing our service costs." The implementation of this strategy has not only improved consumers' shopping experience, but also helped Amazon reduce delivery costs and time.
Despite strong performance, Amazon still laid off employees in several departments at the beginning of this year. During the pandemic, Amazon, like other technology competitors, conducted a massive recruitment campaign, but by last year, as the impact of the pandemic gradually subsided, the company had cut over 27000 jobs.
"We have just ended a period of heavy recruitment," Olsavski told reporters during a conference call
"In most teams, we have a common feeling that we are striving to control the number of employees."