Adam Selipsky, CEO of Amazon Web Services, speaks at the Bloomberg Technology Summit in San Francisco on June 22, 2023.
David Paul Morris | Bloomberg | Getty Images
Amazon said Tuesday that revenue at its cloud unit rose 17% year over year in the first quarter, a faster pace than Wall Street had expected.
Amazon Web Services revenue was $25.04 billion, according to the company’s income statement. Analysts polled by StreetAccount expected $24.49 billion. This growth marks an increase from the 13% increase Amazon reported for AWS in the fourth quarter.
Although Amazon remains primarily an online retailer, the company has become a major entity in the information technology field, providing large businesses, startups and governments with computing resources, database software and networking services. AWS accounts for 17% of Amazon’s $143.313 billion in overall revenue.
The cloud is also a reliable source of profits for Amazon, thanks to high software margins. AWS generated $9.42 billion in operating profit, or about 62% of Amazon’s total. Analysts polled by StreetAccount expected AWS operating profit of $7.52 billion. AWS’ operating margin widened to 37.6%, the largest since at least 2014.
Last week, Google And Microsoft both reported accelerating cloud growth. Amazon remains larger than both in the market, which is growing faster than other areas of information technology, including devices and data center systems, according to industry researcher Gartner.
During the quarter, Amazon announced it made a $4 billion investment in startup Anthropic, which relies on AWS chips to train AI models. AWS CEO Adam Selipsky told Axios in an interview that Anthropic currently offers “market-leading models” in certain areas. Google, which has already invested in Anthropic, offers its own AI models, as does OpenAI, supported by Microsoft.
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