28 March 2023
If you are covering Amazon’s latest financial results, please find below a comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“Amazon delivered good but not great numbers for Q1, beating expectations and seeing an initial pop in the share price after-hours. However, concerns about the growth of its cloud business, Amazon Web Services, reversed some of that rise as the most profitable arm of the company highlighted deceleration in April.
“Indeed, AWS is the largest cloud provider out there, at $85bn per annum of sales, and with the likes of Google and Microsoft upping their game in this regard, it is no surprise to see Amazon lose some market share. However, what many don’t appreciate is the flexibility cloud computing can bring and businesses can switch spend on and off quite easily, giving it an element of cyclicality. Given the macroeconomic backdrop, it is no surprise to see businesses pull back spend and focus on more targeted initiatives. The deceleration isn’t an Amazon specific issue, but being the biggest player means it is exposed to these trends more than most.
“Furthermore, Amazon doesn’t quite have the AI capabilities that Google and Microsoft possess, and as such will be looking to scale up this function as quickly as they can. The key point here, though, is that AI cannot be brought into any customer or business experience without the use of the cloud, and with AWS, Amazon remains well positioned to take advantage of new and emerging technology trends.”
