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Amazon is expected to report 11% revenue growth in its second-quarter earnings report on Thursday, driven by advertising and its investment in artificial intelligence.
The retail and cloud giant is expected to report revenue of $148.7 billion for the second quarter of 2024 — up almost 11% from the previous year, according to FactSet analysts. Meanwhile, Amazon is expected to report net income of about $11 billion — a 65% jump from a year ago.
The company beat Wall Street’s expectations in its first-quarter earnings which were boosted by its advertising service and cloud-computing division, Amazon Web Services. The division’s sales rose 17% year-over-year to $25 billion in the first quarter.
“The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate (now at a $100 billion annual revenue run rate),” Andy Jassy, Amazon president and chief executive, said in a statement. Jassy told analysts on Amazon’s first-quarter earnings call the company sees “considerable momentum on the AI front.”
Amazon is also planning to invest $5.3 billion in Saudi Arabia and $5 billion in Mexico to build infrastructure centers for its AWS division, and is planning a $10 billion investment in two data centers in Mississippi, the company said in its first-quarter earnings release.
The expected surge in the AWS division could drive Amazon closer to its competitors, Microsoft and Google, in the AI race.
In April, Jassy outlined how the company is focusing on the technology in his annual letter to shareholders. Jassy said Amazon is “optimistic that much of this world-changing AI will be built on top of AWS.” Earlier this year, Amazon completed its $4 billion investment in AI startup Anthropic — its largest investment in an outside company ever — as it steps up its efforts against rivals.
However, Amazon’s plans for an AI-powered version of its virtual-assistant, Alexa, are reportedly not close to being ready. The company disputed doubts of its current Alexa AI efforts, and said its Artificial General Intelligence team has access to the company’s in-house chips, Trainium and Inferentia, and Nvidia’s graphics processing units, or GPUs.
Amazon’s stock is up around 22% so far this year.