Amazon shares fell on earnings, earnings beat amid cost-cutting (AMZN) first-quarter earnings on Thursday topped Wall Street targets amid cost-cutting by the e-commerce giant. Amazon stock fell in extended trading as management’s earnings call commentary raised questions about how long the slowdown in cloud computing growth will last.


First-quarter sales for the cloud computing unit, Amazon Web Services, rose 16% to $21.4 billion, down from 37% growth a year earlier. Analysts forecast AWS growth of 15% in the March quarter.

In Amazon’s earnings call, management sees slower growth in Amazon Web Services in April and Q1.

AMZN Stock: How Long Will the Cloud Slowdown Last?

This spooked investors, as Wall Street analysts expected AWS revenue growth to be “valley” in the June 2023 quarter. However, if the US economy falls into recession, AWS’s slowdown will hit the bottom line later. The big three cloud computing giants believe artificial intelligence workloads will eventually spark a resurgence.

Amazon shares rose 12% early on the early earnings release in extended trading. But investors tempered their enthusiasm. Shares fell 2% to 107.57 in recent action on the stock market today.

After the market close, Amazon’s earnings were 31 cents per share on an adjusted basis.

AMZN’s earnings per share rose 9% to $127.4 billion. Meanwhile, analysts expect Amazon to post earnings of 21 cents per share on revenue of $124.6 billion.

Amazon stock: Cost-cutting moves

Advertising revenue rose 23% to $9.51 billion, beating estimates of $9.05 billion.

Amazon forecast June-quarter revenue of $130 billion, in line with analyst estimates, at the midpoint of its outlook.

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Also, Amazon expects second-quarter operating income of $3.8 billion, in the middle of its outlook, below analyst estimates of $4.4 billion.

In January, Amazon said it would lay off 18,000 workers, the largest cut in its 28-year history. In March, it announced plans to cut another 9,000 jobs.

Shares of the e-commerce giant rose 25% in 2023, according to Amazon’s earnings report. Amazon stock has a relative strength rating of 43 out of a possible 99. IBD Stock Checkout.

Follow Reinhardt Krause on Twitter @reinhardtk_tech For updates on 5G wireless, artificial intelligence, cyber security and cloud computing.

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