Amazon reports increased 1Q profits and net sales fueled by cloud computing demand

New York — Amazon on Wednesday reported a sharp increase in profit and net revenue in its fiscal first quarter, driven by strong growth at its major cloud computing unit.

The e-commerce and technology company said sales at its cloud computing unit rose 28% in the January-March period, the fastest increase in 15 quarters. Amazon Web Services reported 24% sales growth in the fourth quarter, which follows the division’s 20% growth in the third quarter.

The Seattle-based company also gave an upbeat outlook for its net sales for the current quarter, beating analysts’ estimates. However, shares slipped nearly 2% in after-hours trading before climbing about 3%.

Investors were closely watching Amazon’s quarterly results to see if the company’s $200 billion investment in artificial intelligence, robots, semiconductors and satellites was starting to pay off. The planned spending for the year marked a 60% increase from Amazon’s $128 billion in capital spending last year and spooked investors, sending the stock down 11% in after-hours trading when it was announced in February.

CEO Andy Jassy defended the spending during the previous quarterly earnings conference call, saying Amazon expected long-term returns on its invested capital.

Last quarter’s results highlighted that demand continues to grow for Amazon’s services and technology.

“We are in the midst of some of the biggest shifts of our lives, we are well-positioned to lead, and I am very optimistic about the future for our customers and Amazon,” Jassy said in a statement released Wednesday.

Amazon released its first-quarter results on the same day that three other tech giants — Microsoft, Meta and Alphabet — released theirs, giving investors a sense of AI spending and cloud growth across the industry.

Big deals Amazon signed with OpenAI, Anthropic, and Meta this month have given the company solid momentum.

Amazon announced what it called a “major expansion” of its partnership with ChatGPT maker OpenAI on Tuesday, a day after the artificial intelligence company announced it was loosening ties with longtime partner Microsoft.

Last week, Anthropic agreed to commit more than $100 billion to Amazon’s AWS cloud platform over the next 10 years to train and manage the artificial intelligence company’s Claude chatbot. The partnership will allow Anthropic to obtain up to 5 gigawatts of Trainium chips from Amazon to train and power its artificial intelligence models, Amazon said.

Also last week, Amazon said Meta, owner of Instagram, WhatsApp and Facebook, had signed a deal to power agentic AI on AWS’s Graviton chips.

However, like other retailers, Amazon faces higher tariff costs due to President Donald Trump’s foreign trade policies. Rising transportation costs, due to the impact of the war in Iran on oil and fuel prices, could also reduce the company’s e-commerce revenue.

Amazon announced this month that it would impose a 3.5% fuel and logistics surcharge on certain third-party sellers using its platform. The temporary fees took effect April 17 for many sellers who use Amazon’s fulfillment services, the company confirmed to The Associated Press.

Meanwhile, Amazon has accelerated order delivery times through a combination of robotics, AI technology and more efficient warehousing. In fact, faster delivery helped Amazon dethrone Walmart in February as the nation’s largest company by revenue, according to Fortune, which compiles a ranking of the 500 largest U.S. companies by total revenue for their respective fiscal years.

A new lightning-fast service called Amazon Now offers order deliveries from a selection of thousands of items in 30 minutes or less. The service is now available in several cities in India, Mexico and the United Arab Emirates and is being tested in several communities in the United States and the United Kingdom, the company announced in February.

The company announced Wednesday that the service has expanded to parts of Tokyo and eight major cities in Brazil, bringing the full availability of Amazon Now to tens of millions of customers in nine countries. Amazon plans to continue expanding its service in the United States and around the world this year, Amazon said.

Amazon reported profit of $30.3 billion, or $2.78 per share, for the three months ended March 31. That compares to $17.1 billion, or $1.59 per share, for the year-ago period.

Net sales increased 17% to $181.5 billion in the quarter, compared to $155.7 billion in the same quarter a year ago.

Analysts were expecting $1.63 per share on revenue of $177.28 billion, according to analysts surveyed by FactSet.

Amazon Web Services revenue reached $37.58 billion. Analysts expected $36.6 billion, according to FactSet.

For the current quarter, Amazon said it expects net sales to be between $194 billion and $199 billion.

This would mean an increase of between 16% and 19% compared to last year’s quarter. Analysts were expecting $188.96 billion for the current period, according to FactSet.