Amazon said on Thursday that its cloud division grew revenue 13% 12 months over 12 months within the fourth quarter, exactly in step with analysts’ projections. The corporate pointed to growing traction in cloud services for artificial intelligence.
Many large technology corporations have worked quickly to release latest products or update existing ones to capitalize on corporate interest in replicating generative AI capabilities after startup OpenAI introduced the ChatGPT chatbot in late 2023. Amazon Web Services, for its part, introduced the Q chatbot for developers and nontechnical corporate employees, together with the Trainium2 chip for training AI models, within the fourth quarter.
AWS posted $24.20 billion in revenue within the quarter. Analysts polled by StreetAccount had been searching for $24.20 billion. Growth sped up from 12% within the third quarter.
“We expect the acceleration to proceed in 2024,” Brian Olsavsky, Amazon’s finance chief, said on a call with reporters.
But a minimum of within the fourth quarter, AWS’ top U.S. challengers continued to grow faster. Revenue from Azure and other cloud services at Microsoft rose 30%, and Alphabet’s Google Cloud revenue, which incorporates Google Workspace productivity software subscriptions, increased about 26%.
Many corporations hung out trying to cut back the amount of cash they spent on cloud resources as rates of interest moved higher, heightening economic concerns. But that trend has been receding.
“While cost optimization continued to attenuate, larger latest deals also accelerated,” Amazon CEO Andy Jassy, the previous head of AWS, said on the corporate’s earnings call. He said clients are “renewing at larger commitments over longer periods, and migrations are growing.”
The Amazon cloud group turned over $7.17 billion in operating income. That is up around 38% and above the StreetAccount consensus of $6.93 billion. Which means AWS delivered 54% of Amazon’s $13.21 billion in total operating income.
AWS now represents 14% of Amazon’s overall revenue.
On the AWS Reinvent conference in Las Vegas in November, Adam Selipsky, Amazon’s cloud leader since 2021, welcomed Nvidia CEO Jensen Huang to the stage to announce a broadening partnership, which included a cluster of Nvidia graphics processing units that Nvidia and cloud clients can use. Huang has also kept GPUs flowing to Google and Microsoft, amongst other cloud infrastructure providers.
In a statement, Amazon highlighted AWS AI wins through the quarter from the likes of Accor S.A., Mitsubishi UFJ Financial Group, Salesforce and The Very Group.
“Gen AI is and can proceed to be an area of pervasive focus and investment across Amazon, primarily because there are few initiatives if any that give us the possibility to reinvent so a lot of our customers experiences and processes, and we imagine it can ultimately drive tens of billions of dollars of revenue for Amazon over the following several years,” Jassy said on the earnings call.
Starting in January, Amazon is extending the useful lifetime of its servers from five years to 6, a change that ought to boost first-quarter operating income by $900 million, Olsavsky said on the earnings call. Amazon announced similar changes in 2020 and 2022.
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