Amazon Web Services has seen its expansion rate surge to 28% during the first quarter, marking the division’s most rapid growth in almost four years. This acceleration helped push Amazon’s financial performance beyond Wall Street projections, providing at least preliminary validation for the company’s contentious plan to invest $200 billion in capital expenditures.
The e-commerce giant reported quarterly sales reaching $181.5 billion, representing a 17% increase, while operating income climbed 30% to $23.9 billion. Both metrics surpassed the company’s own forecasts and beat analyst estimates, which had anticipated approximately $177 billion in revenue.
Net income totaled $30.3 billion, equivalent to $2.78 per diluted share. However, this figure incorporated a $16.8 billion pre-tax gain from Amazon’s stake in Anthropic, artificially boosting the earnings numbers. When excluding this one-time windfall, adjusted earnings per share came in at $1.61, marginally below the $1.62 consensus among analysts.
Amazon’s advertising segment posted 24% growth, generating $17.2 billion during the quarter. The company noted that advertising revenue has exceeded $70 billion over the trailing twelve-month period.
Within the primary e-commerce operations, unit sales expanded by 15%. CEO Andy Jassy characterized this as the most robust growth rate observed since the final stages of COVID-19 pandemic restrictions. Contributing to this performance was enhanced delivery speed, with over 1 billion items shipped either same-day or overnight in the United States during the first four months of the year.
Jassy stated in a press release that Amazon finds itself “in the middle of some of the biggest inflections of our lifetime.”
Over the past twelve months, the company invested $147.3 billion in property and equipment, nearly double the $88 billion spent in the previous year-ago period. This aggressive spending left Amazon with merely $1.2 billion in free cash flow.
Put simply, while Amazon is generating record profits, virtually all of those earnings are being reinvested into expanding capacity, predominantly for AWS and artificial intelligence infrastructure. The company has indicated expectations to spend roughly $200 billion in capital expenditures throughout the full year.
Following the earnings release, shares declined approximately 2% in initial after-hours trading.
During the earnings call, Amazon revealed that its AWS revenue backlog surged to $364 billion, up significantly from $244 billion in the previous quarter. This figure excludes a recently announced agreement with Anthropic valued at over $100 billion. Jassy emphasized that the backlog demonstrates reasonable diversification beyond just one or two major customers.
Jassy also announced that Amazon has secured more than $225 billion in revenue commitments specifically for Trainium, the company’s proprietary AI chip. He described Amazon’s custom silicon business as among the top three data center chip businesses globally and noted the chips division grew almost 40% compared to the preceding quarter.
Looking ahead to the second quarter, Amazon projects revenue between $194 billion and $199 billion, with operating income anticipated in the range of $20 billion to $24 billion. The forecast assumes Prime Day will occur in the second quarter across most countries,
representing a shift from the third quarter timing of last year.
The company’s core e-commerce business benefited from operational improvements, particularly in logistics. More than 1 billion items were delivered to U.S. customers within a same-day or overnight timeframe so far this year, supporting the strong unit sales growth.
Amazon’s advertising business continues to demonstrate strength, with the $17.2 billion quarterly figure contributing to annual advertising revenue that has now topped $70 billion over the past year.
The massive infrastructure investment reflects Amazon’s commitment to positioning itself for long-term growth in cloud computing and artificial intelligence services, despite the near-term impact on free cash flow and the skepticism from some investors regarding the scale of capital deployment.