Amazon CEO says the company wants to be “the world’s best personal assistant” as spending on fulfilment and transportation is cut back.
Q1 profits at Amazon were reported at $3.17b, which was higher than the $2.24b which analysts had anticipated. Revenue for the quarter was $127.4b, which represents +9% growth compared to the $116.4b revenue it achieved during the same period in 2022
However, the company reported zero growth in its online retail business. Instead, income from Amazon’s cloud computing and advertising units drove the company’s profit in the first quarter.
Several weeks ago, Amazon acknowledged that shoppers have become more conscious about their spending. In addition, many consumers have returned to making in-store purchases now that physical stores have re-opened after the pandemic ended.
The results come as Amazon embarks on an aggressive cost-cutting exercise, including laying-off 27,000 workers and cancelling warehouse expansion plans. The company also plans to pause construction on the second phase of its headquarters in northern Virginia, and will also close some of its Amazon Fresh and Go convenience stores.
In a statement accompanying the results, Amazon’s CEO, Andy Jassy, suggested that Amazon’s advertising business, which saw revenues increase by +23% to $9.51b, had benefited from the company’s investments in AI, adding: “I think that’s going to rapidly accelerate our vision of becoming the world’s best personal assistant.”
This view was reinforced by chief financial officer, Brian Olsavsky, who admitted: “On our core fulfilment and in transportation areas, we actually are spending less year-on-year, and those estimates are going down. We are adding more dollars for large language models and generative AI.”