Amazon’s Profit Surge Will Pay for AI-Driven Capex Push

Take a bow, Andy Jassy! The spate of healthy big tech earnings continued on Tuesday, as Amazon reported what have to be described as robust first-quarter results. Its e-commerce business made money both in North America and overseas—that hasn’t been true since 2021—while cloud giant Amazon Web Services posted accelerating sales growth and much stronger profit margins. Overall operating profits more than tripled. What’s not to like? 

Amazon—like Alphabet, Meta Platforms and Microsoft—is earning dividends from cost-cutting measures implemented a year ago. Perhaps more than the other companies, Amazon has made staff cuts a permanent feature of its operations, laying people off earlier this month at AWS, for instance. (Notably, in the first quarter, AWS’s expenses fell 3.7% even as revenue rose 17%.) That cost discipline is important for Amazon, which historically hasn’t had as deep pockets as other big tech firms. Indeed, Amazon burned cash in 2021 and 2022, forcing it to borrow money to fund investments.