Zinger Key Points
- Amazon cuts jobs in communications and sustainability, shifts focus to AI, cloud, and retail margin efficiency.
- Analysts remain bullish on Amazon, citing AWS growth, Prime Video ads, and robotics as key profit drivers.
Amazon.com Inc AMZN downsized dozens of people in its communications and sustainability units after a recent review to cut costs, Bloomberg reports.
The e-commerce giant might rehire some employees for roles at lower levels and redistribute the headcount to other areas within the organization, CNBC reports.
The reports said Amazon will provide financial support and benefits to the affected workers.
Amazon’s global workforce surged to over 1.6 million by 2021 during the COVID-19 pandemic, up from 798,000 in the fourth quarter of 2019. The company had more than 1.5 million employees at the end of the third quarter.
Recently, the company withdrew its operations in Quebec, Canada, and slashed close to 1,700 full-time jobs.
Amazon initiated a record corporate downsizing in 2022, affecting 27,000 positions, followed by multiple smaller rounds of layoffs. The company also urged its employees to report to the office five days a week.
A similar trend is seen with other tech companies. Recent reports indicated that Microsoft Corp MSFT plans to halt hiring in part of its U.S. consulting business, affecting less than 1% of its workforce.
Microsoft fired 10,000 employees in early 2023, implying 4%-5% of its workforce. In January 2024, Microsoft’s gaming unit slashed 1,900 jobs.
In 2023, Alphabet Inc GOOG GOOGL Google cut 12,000 jobs, affecting ~6% of its workforce. Since November 2022, Meta Platforms Inc META said it had laid off 21,000 employees, implying 25% of its workforce.
Analysts from Needham and BofA Securities have expressed optimism on Amazon’s prospects, citing Amazon Web Services growth, retail margin efficiency, and substantial AI-driven cloud opportunities. Amazon’s focus on robotics, Prime Video ads, and cloud innovation positioned the company for multi-year profit growth.
Amazon stock gained 48% in the last 12 months. Investors can gain exposure to Amazon through Fidelity MSCI Consumer Discretionary Index ETF FDIS and ProShares Online Retail ETF ONLN.
Price Action: AMZN stock is down 0.63% at $235.52 at last check Thursday.
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