Amazon Q1 - Accelerating AWS

On Tuesday Amazon released a strong set of numbers, with AWS' growth accelerating to 17%, and advertising revenue up by over 24%. AWS is an important cash and profit generator for Amazon, and an acceleration in revenue growth is an important change. According to management, AWS customers are spending more on services for AI technology applications like chatbots and data-crunching tools.

Amazon's total revenue increased by 13% to $143 billion and operating income increased by 218% to $15 billion year-over-year. After Covid, Amazon needed to go through a bit of restructuring which hit margins, but now that those changes are behind us. Free cash flow improved to $50 billion inflow versus an outflow of $3.3 billion last year; they are printing money.

Advertising is another important, high-margin division for Amazon, which saw revenue grow to $11 billion for the quarter. Not so long ago, advertising wasn't even mentioned, and now it is a $4 billion-a-month business. This just shows what these companies can do with their large customer bases.

Our only disappointment was that Amazon didn't follow Meta and Google in deciding to start paying a dividend. Amazon is still investing heavily in the company's future. Maybe next time.

Amazon is trading close to its all-time high, but remains a strong buy.