Amazon has its most profitable quarter ever, but growth is slowing

Amazon wants to continue its dominance over electronic commerce, but it can only grow a lot. In its first quarter earnings released today, Amazon revealed record profits, more than double what investors predicted, and revenues were in line with Wall Street expectations, at $ 59.7 billion. But the company is once again entering a period of high spending which, together with the slow growth of revenues, can be a hindrance in the future.

It is clear that Amazon is still an extremely profitable company, as the third most valuable corporation on the planet after Apple and Microsoft. But Chief Executive Jeff Bezos continues to invest heavily in artificial intelligence, smart home and physical retail, bets that will not work for quite some time. As a result, Amazon relies heavily on cloud computing and advertising, and less on its extensive e-commerce operation, to maintain momentum.

At this point, the company is starting to increase infrastructure spending again, which takes a toll on its profits. This was the quarter in which Amazon acquired Eero for $ 97 million reported. At this year's CES, Amazon did not have big ads for its own products, but it introduced 13 new Ring products. It is safe to say that the future of Amazon seems to depend on the success of its smart devices for the home.

As Amazon finance manager Brian Olsavsky said in the last quarter earnings call, the company is investing more this year and spending a lot compared to last year, all of which means thinner profits. Olsavsky revealed today that Amazon is working on a free one-day Prime shipping, although it may take time to improve logistics enough to handle various zip codes and products. Amazon Web Services continues to be the largest contributor to the company's bottom line, with revenue of $ 7.7 billion in revenue, a 41 percent increase compared to the previous year and $ 2.2 billion in profits . The success of AWS continues to be Amazon's most important asset, as many of the leading technology companies rely on their cloud services to power their organizations. It is easy for a person to boycott, but it is harder for a person to avoid all organizations that use AWS.

We also feel that Amazon changes strategies and changes in this quarter. The company removed the Amazon Dash buttons that should allow you to order things easily with the push of a button. But the limited interfaces also hid the prices and did not allow customers to weigh their options. Amazon also doubled in its physical stores, and announced that it will close the 87 emerging kiosks in the US. UU Before April 29. It also announced higher discounts on Whole Foods and there were rumors that Amazon would launch its own supermarket chain. The company continues to tear pages from traditional retail books, even when companies like Walmart and Target struggle to compete.

And in what appears to be one of Amazon's biggest losses this quarter, it lost its headquarters in New York City, after protests convinced the company to withdraw. In addition to the turmoil, Amazon CEO Jeff Bezos divorced and gave him more than 25 percent of his shares, with an approximate value of $ 35 billion.

In the future, Amazon is also limiting its already small presence in China, by closing its Chinese service to third-party vendors, effectively renouncing its e-commerce position in one of the largest markets in the world. All this means that Amazon and Bezos are at a new point where they have to evaluate their plans and reorganize what works. It's probably good that Amazon has a hand in so many different pockets, and that he can rely on devices, physical stores and AWS to continue bringing home the benefits.

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