Accounting

Amazon’s Q4 earnings pop on record holiday sales, cloud strength

The tech giant’s cloud computing unit grew 13% year over year.
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Let’s make a deal: We’ll use one (and only one) Amazon Prime pun, and then we’ll tell you what happened in the company’s Q4 2023 earnings.

Deal? Here goes. Based on the report, it’s clear the company is priming itself to take advantage of a new era of tech. The tech giant reported net sales of $170 billion, a 14% increase from $149.2 billion in Q4 2022.

There were a few main drivers behind the company’s solid report, the most obvious of which was Amazon’s massive holiday shopping effort.

“This Q4 was a record-breaking holiday shopping season and closed out a robust 2023 for Amazon,” Amazon CEO Andy Jassy said in a statement. Globally, customers bought more than one billion (yes, billion) items on Amazon during the company’s Black Friday and Cyber Monday shopping events, per the report. Taken together, it was record-breaking: Customers bought more on Amazon over the course of this holiday season than any other.

But other factors supercharging Amazon’s strong report provide a more concise glimpse into where the company is headed. Revenue for the tech giant’s cloud division, Amazon Web Services, grew 13% year over year. AWS reported $24.2 billion in Q4 revenue.

Some tech companies have tried to cut cloud spend amid rising interest rates, “but that trend has been receding,” CNBC reported. During the Amazon earnings call, Jassy noted that “while cost optimization continued to attenuate, larger new deals also accelerated.” In its earnings report, the company spotlighted some of its major cloud computing deals, including with Salesforce and pharmaceutical behemoth Merck.

Alongside its earnings report, the company also debuted a new AI-powered shopping assistant, called Rufus. (We would’ve consulted for free on the name, but hey.) The AI chatbot, which, again, is called Rufus after a former employee’s corgi, can field customer queries and recommend products based on its training from Amazon’s product catalog and customer reviews.

“Gen AI is and will continue to be an area of pervasive focus and investment across Amazon, primarily because there are few initiatives, if any, that give us the chance to reinvent so many of our customer experiences and processes,” Jassy said on the earnings call. “We believe it will ultimately drive tens of billions of dollars of revenue for Amazon over the next several years.”

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.