Amazon (AMZN, Financial) recently released its financial results for the third quarter of fiscal year 2024. The company reported a net sales increase of 11% to $158.877 billion, with net profit soaring 55% to $15.328 billion. Earnings per diluted share rose to $1.43 compared to $0.94 during the same period last year.
In a discussion with investors, Amazon's leadership team shed light on key aspects driving growth, particularly highlighting the success of AWS cloud services. The company achieved a 38% profit margin in AWS, driven by strong market demand and extended server lifespans contributing to a 200 basis point increase in profit margin. Cost efficiency, especially in recruitment and infrastructure, also played a significant role in maintaining high performance levels.
Looking ahead, Amazon anticipates capital expenditure of approximately $75 billion for the year, with a significant portion allocated to AWS. Investments are primarily focused on advancing artificial intelligence technology, which is experiencing triple-digit growth.
Amazon's AI business is currently positioned similarly to AWS in its early days but at a much faster growth rate. Despite competitive pricing and underutilized resources in AI data centers, Amazon remains confident in achieving over 30% profit margins in the long term, similar to AWS's current levels.
Overall, Amazon's commitment to long-term AI investments is expected to yield substantial opportunities for growth and profitability, much like its previous successes with AWS.
