Amazon records 13% growth in revenue, bets big on AI

Seattle, US-headquartered Amazon has reported 13% year-on-year growth in revenue at $143.1 billion for Q3 of FY 2023, beating analyst estimates. The growth came on the back of the retail giant's revenue growth in the advertising business, which grew 26% over the corresponding quarter last year, and momentum picked up for the company’s cloud-computing business, AWS. 

“We had a strong third quarter as our cost to serve and speed of delivery in our stores business took another step forward, our AWS growth continued to stabilise, our advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” said Andy Jassy, CEO of Amazon, in a statement issued by the company. 

During the earnings call, Jassy spoke at length about AWS’s bet on generative AI and Amazon’s strategic investment in AI startup Anthropic earlier this year. 

Amazon committed to investing $1.2 billion in Anthropic in September 2023 with an option to increase its investment up to $4 billion. As part of the deal, Anthropic will use AWS as the primary cloud provider for mission-critical workloads. This will help AWS compete with Microsoft, Meta, Google and others looking to tap into the growing segment. 

“Customers are excited about our approach to generative AI, with several new announcements made during the quarter, including a strategic collaboration with Anthropic, opening Amazon Bedrock up to general availability, adding Meta's Llama 2 model to Bedrock in the near future and new customization capabilities of CodeWhisperer,” said Jassy during the call. 

He added that the number of companies building generative AI apps in AWS had been growing, including the likes of Adidas, Booking.com, Bridgewater, Clariant, GoDaddy, LexisNexis, Merck, Royal Philips, and United Airlines. 

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Amazon has also introduced generative AI experience for its customers across in-house businesses including its recent announcement of a generative AI image generation tool as part of its advertising business. Amazon has also upgraded its virtual assistant Alexa’s LLM to address multiple requests at once and process more conversational requests. 

The quarter ending September 30, 2023 also saw the conclusion of Prime Day sales in July across 19 countries. The company did not disclose specific numbers for the international ecommerce business. 

Net sales for North America grew 11% year-on-year to $87.9 billion while the growth in international markets stood at 16% at $32.1 billion. 

The company has predicted that net sales are expected to grow between $160 billion to $167 billion for the upcoming quarter, a growth of 7-12% over the previous year.