Amazon's Q1 Revenue Exceeds Expectations, AWS Growth Hits Four-Year High

Amazon announced its Q1 financial results after the market closed on Wednesday, with revenue of $181.519 billion, a year-on-year increase of 17%, exceeding analyst expectations; operating profit of $23.852 billion, operating profit margin rising to a new high of 13.1%; net profit increased by 77% year on year to $30.255 billion, which includes $16.8 billion in pre-tax non-operating income from investments in Anthropic.

AWS business revenue in Q1 was $37.587 billion, a year-on-year increase of 28%, reaching the highest single-quarter growth since Q2 of 2022, and contributing nearly 60% of the company's operating profit. This strengthens Amazon's AI narrative - during the conference call, the company disclosed that AWS had an order backlog of $364 billion at the end of Q1, excluding a new agreement of over $100 billion recently signed with Anthropic, and the management stated that the customer composition is quite broad.

In Q1, Amazon's spending on real estate and equipment purchases reached $44.203 billion, with related spending over the past 12 months at the end of the quarter reaching $151 billion, a year-on-year increase of 160%, and free cash flow in the past 12 months decreased by 95% year on year to $1.232 billion.

Amazon's stock price fluctuated after hours, with investors initially concerned about AI capital expenditure and free cash flow pressure, and then repricing AWS's re-acceleration, strong Q2 revenue guidance, and short-term revenue support brought by the early June Prime Day.

The Q2 guidance further amplified this divergence. Amazon expects net sales in Q2 to be between $194 billion and $199 billion, with the mid-value higher than market expectations, but the mid-value of the operating profit guidance is lower than market expectations, indicating that revenue elasticity may not be fully translated into profits and cash flow.