Photo Credit: simone.brunozzi/Flickr.com
 

Amazon (Nasdaq: AMZN) recently announced its first-quarter results that surpassed market expectations. Its stock hit a 52-week high following its result announcement.
 

Amazon’s Financials

Amazon’s first quarter revenues grew 13% to $143.3 billion, ahead of analyst estimates of $142.5 billion. Net income increased to $10.4 billion or $0.98 per share, compared with net income of $3.2 billion, or $0.31 per share a year ago. Analysts estimated EPS of $0.83 per share.

By segment, Net Product sales grew 7% to $60.9 billion and Net Service sales grew 17% to $82.4 billion.

North American sales grew 12% to $86.3 billion, while international sales grew 10% to $31.9 billion.

Revenues from Amazon Web Services (AWS) increased 17% to $25 billion beating analyst estimates of $24.5 billion. Advertising services revenue grew a strong 24% to $11.8 billion, beating analyst estimates of $11.7 billion. 

Online stores revenue grew 7% to $54.7 billion. Subscription services revenues grew 11% to $10.7 billion. Physical stores revenue grew 6% to $5.2 billion. Revenue from third party sellers grew 16% to $34.6 billion.

Amazon expects second quarter revenues of $144-$149 billion or a growth 7% to 11%. The market was looking for revenues of $150.1 billion.
 

Amazon’s GenAI Stack

During the earnings call, the company said that it is seeing considerable momentum on the AI front, where it has a multi-billion dollar revenue run rate. AWS has a three-layer GenAI stack: custom training chips, a managed service called Bedrock, and applications like a coding companion called Amazon Q and shopping assistant called Rufus. 

At the bottom layer, which is for developers and companies building models themselves, the company is seeing high demand for its custom chips Trainium and Inferentia. Its managed, end-to-end service Sagemaker is also seeing good traction from Perplexity AI, Workday, and NatWest.

At the middle layer, Bedrock, available since September 2023, is a managed service for building and scaling GenAI applications. Companies can leverage an existing large language model (LLM) and customize it with their own data. Bedrock already has tens of thousands of customers including Adidas, New York Stock Exchange, Pfizer, Ryanair, and Toyota. In the last few months, Bedrock’s added Anthropic’s Claude 3 models, Meta’s Llama 3 models, new first-party Amazon Titan models, and models from Mistral and Cohere. Bedrock recently launched Custom Model Import, which makes it simple to import models from SageMaker or elsewhere, into Bedrock before deploying their applications. 

At the top layer are applications like Amazon Q, a GenAI-powered coding expert on AWS. It writes code, debugs code, tests code, and can also query customers’ various data repositories and answer questions, summarize this data, carry on a coherent conversation, and take action. Its customers include Brightcove, British Telecom, Datadog, GitLab, GoDaddy, National Australia Bank, NCS, Netsmart, Slalom, Smartsheet, Sun Life, Tata Consultancy Services, Toyota, and Wiz. Its general availability was announced recently during the earnings results.

Its stock is trading at $186.57 with a market capitalization of $1.94 trillion. It touched a 52-week high of $191.7 early this month. It had fallen to a 52-week low of $109.25 in May last year.

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