Amazon’s Web Services Steadily Growing
Amazon’s Web Service (AWS) is steadily growing, the company said while releasing their first quarter results of the year. According to Amazon, the AWS generated sales of $1.57 billion in the company’s first quarter of the year.
The AWS is a cloud computing offering which makes its money by charging a fee to businesses which want to host websites, as well as other applications.
Jeff Bezos, the founder of Amazon, in a statement, said that, “Amazon web services is a $5 billion business and still growing.”
That said the total revenue of the firm for its first quarter rose to $22.7 billion, that’s an increase of 15%.
That increased was stronger than many had expected, with revenues buoyed by the increase in sales in North America which is Amazon’s biggest market.
Despite the gains, Amazon announced a loss of $57 million for its quarter but that did not affect the company’s shares as they rose nearly 5% in after-hours trading.
The profitability of the AWS has without a doubt surprised many people and Amazon can use it to soothe investors who have been eagerly waiting for the firm to make profits.
Amazon’s Web Service “was surprisingly more profitable than forecast", Dan Kurnos, said while speaking with the BBC.
Kurnos, an analyst at the Benchmark Company, added that “AWS should help [Amazon] justify their heavy investment spending and provide a clearer path to profitability for the [overall] company as AWS grows."
Wedbush Securities’Michael Pachter said that, “I think most of us believed that the business [AWS] was breakeven at best, and it is surprising that it generates such a significant portion of profit." He added that, “The stock is up because it is clear that if that business scales, Amazon can be immensely profitable."