Amazon records strong growth in Q2, attributes it to advertising and AI
Abimbola Mohammed
The ecommerce giant Amazon has announced that its second-quarter revenue rose 11% to $134.4 billion, with artificial intelligence, cloud services and advertising playing a major role in the increase.
According to Amazon.com, Inc., Amazon Web Services (AWS), cloud-computing business grew 12% year-over-year to $22.1 billion while advertising has become one of Amazon’s highest-margin businesses. Advertising contributed $10.6 billion in revenue in the quarter, up 22% over a year ago, compared with a 23% growth rate in Q1 and 21% growth in the year-ago quarter.
Andy Jassy, Amazon CEO, in a statement on the company’s website said the company continues to see strong demand for its advertising services as the team innovates for brands, including the ramp-up for “Thursday Night Football.” Advertisers now have the ability to tailor TV spots by audience and create interactive experiences for consumers.
Under its 11-year pact with the NFL, Amazon is reportedly paying about $1 billion annually for exclusive rights to 15 regular-season games and one preseason game per year.
In Q2, Amazon introduced what it claims are more advanced machine-learning models to help advertisers “reach previously unaddressable audiences with Amazon Ads” as the digital ad business moves away from third-party browser cookies.
During the quarter, the company made many advancements in AWS. Jassy explained how customers have begun to shift from cost optimization to new workload deployment, and the methods that AWS continues to take by adding generative artificial intelligence (GAI) services that make it much easier and more cost-effective for companies to train and run models with help from Trainium and Inferential chips.
Customized Large Language Models help to build generative AI applications and agents on Bedrock, and write code much more efficiently with CodeWhisperer.
Amazon’s cloud computing business rose 12%, contributing $22.1 billion to revenue, but fell from a growth rate of 33% a year earlier.
Services and products for third-party merchants have been expanding in recent years, with revenue from third-party seller services rising 18% to $32.3 billion.
Third Quarter 2023 Guidance
Net sales are expected to be between $138.0 billion and $143.0 billion, or to grow between 9% and 13% compared with third quarter 2022. This guidance anticipates a favorable impact of approximately 120 basis points from foreign exchange rates.
Operating income is expected to be between $5.5 billion and $8.5 billion, compared with $2.5 billion in third quarter 2022.
This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.
RECOMMENDED ARTICLES
Comment
No comments found.