Amazon announced on Thursday, February 1st, that its cloud division experienced a 13% year-over-year revenue growth in the fourth quarter, meeting analysts’ expectations. The company attributed this growth to the increasing adoption of cloud services, particularly in artificial intelligence.
The technology landscape has witnessed rapid product releases and updates from major companies, responding to heightened corporate interest in replicating generative AI capabilities. Amazon Web Services (AWS) introduced the Q chatbot for developers and non-technical corporate workers, along with the Trainium2 chip for AI model training, during the fourth quarter.
AWS reported $24.20 billion in revenue for the quarter, aligning with analyst estimates. This represented an acceleration from 12% growth in the third quarter, with Amazon’s finance chief, Brian Olsavsky, anticipating continued acceleration in 2024.
However, in the fourth quarter, AWS faced stiffer competition from its top U.S. rivals. Microsoft’s Azure and other cloud services saw a 30% increase in revenue, while Alphabet’s Google Cloud, including Google Workspace subscriptions, recorded a 26% revenue growth.
While some companies had initially aimed to reduce spending on cloud resources due to rising interest rates and economic concerns, this trend has diminished. Amazon CEO Andy Jassy noted that cost optimization efforts are moderating, and larger new deals are gaining momentum, with clients renewing commitments over longer periods.
In terms of operating income, AWS generated $7.17 billion, marking a 38% increase and surpassing the Street Account consensus. This accounted for 54% of Amazon’s total operating income of $13.21 billion. AWS now constitutes 14% of Amazon’s overall revenue.
At the AWS Reinvent conference in November, Amazon emphasized its commitment to AI, announcing partnerships with Nvidia. Amazon CEO Jassy highlighted significant AI wins with companies like Accor S.A., Mitsubishi UFJ Financial Group, Salesforce, and The Very Group during the quarter.
Furthermore, starting in January, Amazon extended the useful life of its servers from five to six years, a move expected to boost first-quarter operating income by $900 million, according to Olsavsky. This echoes similar changes announced by Amazon in 2020 and 2022.
For More Details : Click Here
