Amazon’s cloud unit grew 36.5% year over year in the first quarter, a bit faster than analysts projected. But Amazon shares were down about 9% in after-hours trading, as investors took in the retailer’s $3.8 billion overall net loss.
The result points to lighter but still brisk demand for computing, storage and database services delivered from faraway server farms. Amazon Web Services’ revenue growth slowed from 39.5% in the fourth quarter. AWS’ fiercest rivals, Microsoft’s Azure and Alphabet’s Google Cloud Platform, maintained constant growth or decelerated slightly.
Amazon disclosed in its quarterly earnings announcement that AWS revenue totaled $18.44 billion in the quarter, above the $18.27 billion consensus among analysts polled by StreetAccount. That works out to about 16% of Amazon’s total revenue.
The cloud isn’t just another quickly expanding business for Amazon. At Amazon, cloud means profit. AWS threw off $6.52 billion in operating income in the first quarter, up almost 57% and higher than the $5.62 billion StreetAccount consensus. Amazon’s total operating income was $3.67 billion in the quarter, meaning that the overall business would have lost even more money were it not for AWS.
AWS’ operating margin widened to 35.3% from 29.8% in the fourth quarter.
Amazon introduced AWS in 2006, before Microsoft Azure or the Google Cloud Platform, and in 2020 AWS led the market with around 41% share, according to research firm Gartner.
In the quarter AWS said Stellantis, the automaker previously known as Fiat Chrysler, will draw on its cloud services for in-car dashboard software and electronics retailer Best Buy will use more AWS tools.
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