Amazon results beat third quarter expectations

E-commerce giant Amazon reported stronger-than-expected third quarter results on Thursday, with significant growth in cloud computing and a return to profitability in its international segment.

The Seattle-based tech titan posted net sales of 158.9 billion dollars for the quarter ending September 30, up 11 percent from the same period last year, with net profit up to 15.3 billion dollars.

Amazon Web Services (AWS), the company's cloud computing division, continued its robust performance with sales increasing 19 percent year-over-year to 27.5 billion dollars.

The strong cloud performance comes amid increasing competition for AI-related services from Microsoft and Google.

Like its rivals, AWS has invested heavily in artificial intelligence, building out data centers and the computing capacity that is required to deliver AI to cloud customers.

In a turnaround, Amazon's international segment reported an operating profit of 1.3 billion dollars, compared to a small loss in the same quarter last year.

North American operations also showed improvement, with operating profit rising to 5.7 billion from 4.3 billion dollars year-over-year.

The company also saw a 19 percent rise in advertising sales, as that business becomes takes on a greater share of revenue on the platform.

"As we get into the holiday season, we're excited about what we have in store for customers," said Amazon CEO Andy Jassy.

He highlighted the success of Prime Big Deal Days and noted strong performance from the company's new Kindle lineup.

The company has also announced plans to expand its Amazon Pharmacy Same-Day Delivery service to nearly half the US, signaling a continued focus on healthcare services despite some doubts by investors on the sector.

Looking ahead to the crucial holiday quarter, Amazon forecasts net sales between 181.5 billion and 188.5 billion dollars, representing growth of seven percent to 11 percent compared to the same period in 2023.

That helped send the Amazon share price surging by five percent in extended trading.

"Amazon continues to be the primary beneficiary of the US consumers' shift to online shopping and a healthy Prime Day helped boost revenues for the retail and ad businesses," said Emarketer principal analyst Sky Canaves.

"The bind for investors is that Amazon has had to increase AI-related spending for AWS to keep up with demand and defend its market share," Canaves added.

But the giant is in "a relatively good position since it has been steadily building (cloud) capacity and faces fewer constraints" than its rivals.

The rosy results came a day after Microsoft and Meta failed to impress investors, sending their shares sharply lower even though earnings beat expectations.

That followed better-than-expected results from Google-parent Alphabet on Tuesday.(AFP)