Amazon.com Inc AMZN CEO Andy Jassy has expressed optimism about the future of the company’s Amazon Web Services or AWS during the first-quarter 2024 earnings call.
What Happened: On Tuesday, during the call, Jassy highlighted the potential for AWS, stating that despite the segment’s $100 billion-plus annualized revenue run rate, over 85% of the global IT spend is still on-premises. “We remain very bullish on AWS.”
He also noted the impending rise of gen AI, which is expected to be predominantly cloud-based over the next 10 to 20 years, presenting a significant opportunity for AWS. “There is a very large opportunity in front of us,” he stated.
Jassy went on to highlight AWS’s competitive edge, which is attracting more companies to shift their AI focus to AWS.
“We expect the combination of AWS’ reaccelerating growth and high demand for gen AI to meaningfully increase year-over-year capital expenditures in 2024, which given the way the AWS business model works is a positive sign of the future growth,” the Amazon CEO said, adding, “The more demand AWS has, the more we have to procure new data centers, power and hardware.”
Why It Matters: In April 2024, it was reported that the workforce reductions in AWS, were part of the company’s efforts to streamline operations and pivot towards digital. At the time, the e-commerce giant reported cited overlapping roles as a reason behind these cuts.
However, despite this, AWS has continued to innovate, launching services such as Deadline Cloud to transform media and entertainment content creation and rendering.
Meanwhile, in the first quarter, Amazon’s net sales reached $143.3 billion, marking a 13% increase compared to the previous year and surpassing the Street’s estimated net sales of $142.5 billion, according to data from Benzinga Pro.
AMZN Price Action: At the time of writing, Amazon shares were up by 1.23% in the after-hours session at $177.16, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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