Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally.
Amazon.com Inc.’s third-quarter results for 2024 have reinforced its position as a tech and retail powerhouse, showcasing solid revenue growth across its core segments: e-commerce, cloud services (AWS), and advertising. Total revenue for the quarter surged by 11% year-over-year to $158.9 billion, exceeding analyst expectations and highlighting Amazon’s strategic ability to expand profit margins while controlling costs effectively. Operating income reached $17.4 billion, surpassing projections of $14.7 billion, with the operating margin climbing to 11% from 7.8% in the previous year.
A standout contributor to Amazon’s profitability continues to be its cloud division, Amazon Web Services (AWS), which reported a 19% increase in revenue to $27.5 billion. AWS also maintained a strong operating margin of 38.1%, underscoring the division’s ability to capitalise on growing demand for cloud infrastructure and enterprise IT services. As businesses increasingly adopt cloud and AI-driven solutions, Amazon’s AI investments will likely enhance AWS’s capabilities, although near-term spending may cause temporary fluctuations in cloud-services margins. Nonetheless, AWS’s long-term growth potential remains intact as companies gradually shift infrastructure to public cloud providers, creating a broad market for Amazon to capture.
Amazon’s retail sector also performed strongly, with online stores generating $61.4 billion, reflecting a 7% increase from the previous year. This growth aligns with Amazon’s focus on speed, value, and convenience—factors that resonate with customers, particularly in essential goods and everyday items. Physical stores contributed $5.23 billion in revenue, while Amazon’s third-party seller services reached $37.86 billion, marking a 10% year-over-year increase. Together, these figures highlight Amazon’s ability to retain consumer interest and grow market share in an increasingly competitive retail landscape.
In addition to e-commerce and cloud services, Amazon’s advertising division has proven to be a valuable asset, with sales jumping 19% to $14.3 billion. This segment leverages Amazon’s extensive consumer data to attract advertisers and bolster overall profitability. The advertising business’s rapid growth demonstrates Amazon’s strength in monetising its vast user base and reaching diverse audiences, positioning it to compete effectively with other digital advertising giants.
Amazon’s outlook for the fourth quarter reflects its confidence in sustaining growth while navigating substantial investments in AI and infrastructure. The company projects net sales between $181.5 billion and $188.5 billion, which aligns closely with market expectations. Operating income guidance ranges from $16 billion to $20 billion, indicating Amazon’s strategic balancing of revenue growth and essential investment. To support AI and cloud expansion, capital expenditure for 2025 may exceed this year’s projected $75 billion, emphasising Amazon’s commitment to positioning AWS as a premier AI-powered service provider. CEO Andy Jassy has described AI as a “once-in-a-lifetime opportunity,” underscoring the potential for this investment to drive future growth and shareholder value.
The recent results illustrate Amazon’s success in streamlining operations, which has included optimising its logistics and cost structures. Fulfilment expenses rose 11% year-over-year to $24.66 billion as Amazon scales its infrastructure to support growing customer demand. Additionally, Amazon’s workforce expanded by 3% to more than 1.55 million employees, underscoring its efforts to manage a robust supply chain and sustain service quality.
Although investments in AI infrastructure and other innovations may impact short-term profitability, these expenditures are strategically aligned with Amazon’s vision for long-term growth. Investors reacted positively to Amazon’s performance, with shares rising approximately 5% post-announcement and marking a 23% increase year-to-date. As a reminder, AMZN’s inclusion in the US Growth Portfolio is based on share price momentum, and while it continues to perform well on a relative basis it will remain within the portfolio.
