Reported by The Guardian
E-commerce company posts high cloud computing sales but gives a cautious sales forecast for the fourth quarter
Amazon offered a mixed picture of its financial health on Thursday in its quarterly earnings report.
The e-commerce company gave a cautious sales forecast for the current fourth quarter, which encompasses the critical holiday shopping period, after delivering fiscal third-quarter results that came in below Wall Street analysts’ expectations.
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The Seattle-based company posted strong growth, however, in its prominent cloud computing unit. Sales in its cloud computing unit, called AWS, rose 39.3% during the latest quarter ended 30 September, higher than the 37% clip in the previous quarter. It marked the fastest growth rate in nearly five years, the company said.
Still, shares were down more than 6% in after-market trading when the results were released as investors focused on the core business.
The tech company said earlier this month that it would hire 300,000 US seasonal workers for the shopping period, up from 250,000 last year.
Investors also have been closely watching Amazon’s quarterly earnings to see if the company’s big spending on artificial intelligence is starting to pay off.
Andy Jassy, the company’s CEO and president, disclosed to investors in July that Amazon now expects capital spending, mostly on artificial intelligence, to total $220bn for this fiscal year. That number includes outlays on robots, semiconductors and satellites. That’s up from the $200bn investment plan that was announced in February and well above the $128bn in capital spending for all of last year. Jassy had cited the higher cost of memory chips as the main reason for the increase.
Jassy told investors this past summer that even at the $220bn level, Amazon will not have enough capacity to meet all of its customers’ demands this year.
The latest earnings report from Alphabet late Wednesday raised alarm bells when it reported weaker growth for the summer than analysts expected. The company behind Google and YouTube also said it burned through more cash during the latest quarter, according to a measure called free cashflow, after its purchases of property and equipment topped $51bn. Its…