Amazon’s second-quarter results for 2024 showed a 10% increase in revenue to $147.98 billion, falling short of Wall Street’s estimates of $148.56 billion. However, profits exceeded expectations at $13.5 billion, nearly double the profits from the same quarter a year ago. The earnings per share were $1.26, surpassing expectations of $1.03 per share. Amazon’s CFO, Brian Olsavsky, mentioned that average selling prices are declining as consumers remain cautious with their spending. Although there has been strong unit sales growth, lower ASP products are being favored by customers.
To address the decline in ASP, Amazon is planning to launch a new storefront with lower-priced items and slower shipping directly from Chinese sellers. This move is intended to compete with emerging rivals such as Temu and Shein. Olsavsky did not directly comment on these reports during the media call. Amazon also faced a $1 billion headwind from foreign exchange rates in the quarter, which was $300 million more than expected. The company is investing heavily in expanding its Amazon Web Services cloud infrastructure, with capital expenditures and equipment finance leases totaling $30.5 billion in the first half of the year.
AWS revenue reached $26.3 billion, up 18.7%, with operating profits of $9.4 billion. Sales in Amazon’s largest segment, online stores, rose 5% to $55.4 billion. Revenue from third-party seller services also increased by 12% to $36.2 billion. The advertising segment showed the biggest percentage growth, up 20% to $12.8 billion. In its guidance for the current quarter, Amazon expects net sales between $154 billion and $158.5 billion. This translates to a midpoint of $156.25 billion, which is below the average estimate of $158.24 billion.
The current quarter poses challenges in terms of prediction, with distractions from news events, elections, and the Olympics affecting consumer behavior. Shares fell by 4% in initial after-hours trading following the release of the second-quarter results. Despite falling slightly short of revenue estimates, Amazon’s strong profits and growth in key business segments indicate continued success for the tech giant. The company’s strategic initiatives to address changing consumer preferences and invest in AI infrastructure position Amazon for further growth in the future.
Overall, Amazon’s second-quarter results highlight the ongoing impact of consumer behavior on its business, with lower ASP products being favored amid cautious spending. The company’s investments in AI and cloud infrastructure, particularly through AWS, reflect its commitment to innovation and growth. Despite challenges in predicting consumer behavior for the current quarter, Amazon’s strong performance in key segments bodes well for its future outlook. The competition from emerging rivals and the need to adapt to shifting consumer preferences present both challenges and opportunities for Amazon as it continues to navigate the evolving e-commerce landscape.
