Amazon’s stock is performing well in 2024 under the leadership of CEO Andy Jassy, with a 15% increase in the first four months outpacing the Nasdaq’s growth. Jassy’s cost-cutting strategies have boosted profitability, but revenue growth still lags behind historical averages. Jassy is committed to turning generative AI into a significant source of growth for Amazon, but investors may have to wait for this vision to translate into faster revenue growth. There are suggestions that Amazon should follow Apple and Alphabet’s lead by paying dividends and buying back stock to attract investors.
Amazon’s first-quarter earnings report for 2024 was mixed, featuring better-than-expected sales and profitability along with disappointing revenue guidance for the future. Key numbers included revenue of $143.3 billion, earnings per share of 98 cents, AWS revenue of $25 billion, advertising revenue of $11.82 billion, Q2 revenue guidance between $144 billion and $149 billion, and Q2 operating income guidance between $10 billion and $14 billion. The company’s single-digit growth forecast raises questions about its reliance on previous growth investments under its former CEO, similar to Apple’s experience.
Jassy is trying to catch up to competitors like Microsoft and Google by focusing on generative AI as a key growth strategy for Amazon. Some key moves in this direction include companies running generative AI applications on AWS, the introduction of Amazon Q, an AI chatbot for businesses, the development of Rufus, an AI-powered shopping assistant, and investments in AI startup Anthropic. These initiatives aim to leverage generative AI to drive additional revenue for Amazon and enhance customer experiences on the platform.
Amazon’s cash position has grown significantly, with cash and equivalents increasing to $73.9 billion in the first quarter. However, the company has not followed in the footsteps of peers like Meta and Alphabet by paying dividends and buying back stock. While Meta and Alphabet have announced dividend payments and stock buyback plans, Amazon has indicated that it will continue to prioritize investing in growth initiatives like generative AI. Despite its significant cash position, Amazon has chosen not to pay dividends at this time, focusing instead on investing in future growth opportunities.
Overall, Amazon’s performance under Jassy’s leadership is strong, with improvements in profitability and a focus on generative AI as a key growth strategy for the company. While revenue growth may be slower in the short term, the company’s initiatives in AI and other areas show promise for driving future growth. Investors will need to monitor Amazon’s progress in these areas and evaluate the company’s decision not to pay dividends or buy back stock despite its growing cash reserves.
