(CTN News) – As part of cost-cutting efforts, Amazon.com (AMZN) reported an increase in earnings for the first quarter on Thursday, beating Wall Street forecasts amid a stronger economy.
The stock of fell in extended trading as management’s comments on the company’s earnings call raised questions about how long a slowdown in cloud computing growth will last.
AWS’s cloud computing unit, Amazon Web Services, posted a 16 percent increase in sales in the first quarter of 2013, down from a 37% increase in the same period a year ago. For the third quarter of this year, analysts had projected that Web Services would grow by 15%.
In the earnings call, Amazon’s management said that Amazon Web Services (AWS) have seen slower growth in April compared with the first quarter.
How long will the slowdown in Amazon’s cloud services last?
As a result of that, Wall Street analysts anticipated that Web Services revenue growth would “trough” in the June quarter of 2023, and then begin to pick up gradually after that.
However, if the U.S. economy plunges into a recession at some point in the future, AWS’s slowdown might not bottom out until a later time.
It is widely believed that artificial intelligence workloads will eventually spark a rebound in cloud computing demand among the three giants.
As a result of the initial earnings release, shares shot up by 12% in extended trading on Wednesday. There was, however, a tempering of investor enthusiasm. On the stock market today, shares in the company dropped by 2% to 107.57 points in recent trading.
During the quarter ended September 30th, 2006, Amazon reported an adjusted earnings per share of 31 cents.
In the last quarter, Amazon’s revenue grew by 9% to $127.4 billion, which is a record high. It is expected that will report earnings of 21 cents a share on a revenue of $124.6 billion in the third quarter.
The Amazon Stock: How the company is cutting costs
A 23% increase in ad revenue to $9.51 billion was reported, well above estimates of $9.05 billion.
At the midpoint of the company’s outlook for the June quarter, Amazon expects revenue to come in at $130 billion, in line with analyst expectations.
Moreover, Amazon announced that it expects operating income to be $3.8 billion at the midpoint of its outlook, which is below analyst estimates of $4.4 billion for the second quarter.
As of January, Amazon announced that it would be laying off 18,000 employees, the largest reduction in its 28-year history. The company announced plans to cut another 9,000 jobs in March of this year.
As prepared to release its earnings report for the year 2023, shares in the e-commerce giant were up 25% in 2023. As per stockcheckup.com, stock has a Relative Strength Rating of 43 out of a possible 99, which is the best possible rating.