Amazon Reports Strong Q3 Earnings Driven by Online Sales and Advertising Growth

by Anna

Amazon, the global e-commerce giant, released its third-quarter earnings report on Thursday, revealing robust financial performance for the summer months. The company reported significant increases in both revenue and profits, driven by strong growth in online sales and its thriving advertising business.


For the period ending on September 30, Amazon reported a total revenue of $143.1 billion, marking a substantial 13% increase compared to the same period in the previous year. This revenue figure exceeded analysts’ expectations and had a positive impact on Amazon’s stock prices during after-hours trading. The company’s net profits for the quarter reached $9.9 billion.


In a prepared statement, Amazon CEO Andy Jassy emphasized the company’s remarkable quarter, attributing its success to the substantial growth of its advertising business and notable improvements in delivery speed.

One notable achievement was the acceleration of deliveries to Amazon’s Prime customers, thanks to a logistics model involving warehouses in eight regions across the United States serving smaller areas. Amazon’s Chief Financial Officer, Brian Olsavsky, revealed that this year, the company achieved its fastest delivery times for U.S. customers.

Olsavsky expressed Amazon’s readiness to provide an exceptional holiday shopping season for customers, highlighting the optimization of Amazon’s operational network and inventory positioning, making it the best-prepared holiday season to date.

Despite rising interest rates and persistent inflation, consumers have demonstrated resilience in their spending habits. Amazon’s retail business, excluding changes in foreign exchange rates, witnessed a 6% growth during the third quarter. This growth was notably boosted by Amazon’s popular Prime Day sales event held in July. The company is also experiencing strong customer demand across various categories, including beauty, health, and personal care items.

While Amazon’s core e-commerce business continues to perform well, investors have been closely monitoring the growth of Amazon Web Services (AWS), the company’s highly profitable cloud computing unit. AWS played a pivotal role in bolstering Amazon’s earnings during a period of reduced online sales in the aftermath of the pandemic. In the past year, AWS faced a slowdown in its growth rate, attributed to companies’ efforts to manage costs amid inflation and broader economic concerns.

Amazon CEO Andy Jassy addressed these concerns by noting that AWS continued to stabilize with a 12% growth rate, slightly below the 13% growth expected by analysts. In the same period, Amazon’s cloud competitors experienced mixed results, with Microsoft reporting strong revenue for its flagship cloud platform, Azure, while Google’s Cloud division fell short of analysts’ expectations.

Investors remain optimistic about AWS and its potential in the expanding field of artificial intelligence (AI). In recent months, Amazon introduced generative AI tools for AWS customers to develop their applications. Additionally, Amazon announced a substantial $4 billion investment in Anthropic, an AI startup based in San Francisco, founded by former members of OpenAI, known for its partnership with Microsoft. Under the agreement, Anthropic selected AWS as its primary cloud computing service, leveraging Amazon’s custom chips for training and deploying generative AI systems.

Amazon is continuously enhancing its voice assistant, Alexa, with new AI features that aim to make it more human-like. The company also unveiled a generative AI feature designed to summarize product reviews for customers, enhancing the shopping experience.

Furthermore, Amazon’s advertising business is flourishing, reporting a 25% growth rate, excluding changes in foreign exchange rates, during the third quarter.

However, Amazon is currently facing regulatory scrutiny on multiple fronts. Last month, the Federal Trade Commission, along with 17 U.S. states, filed a significant lawsuit against Amazon, alleging that the e-commerce giant engages in anti-competitive practices that increase prices for consumers on and off its platform. These legal challenges come under the leadership of FTC Chair Lina Khan.

Amazon is also facing a separate lawsuit that questions the company’s business practices and accuses it of misleading consumers into enrolling in the Prime subscription program. Amazon has consistently denied these allegations.

As the year progresses, Amazon projects its earnings for the fourth quarter to be between $160 billion and $167 billion, remaining optimistic about its future financial performance.


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