It did this because its international and North American businesses lost money in 2022 due to increased shipping and fulfillment costs in both geographic regions. This was also due to increased investments in its fulfillment network and technology.
Through the first six months of 2023, North America made $4.1 billion on an operating basis. Its onternational segment lost $2.1 billion, down from a $3.1 operating loss in the first six months of 2022.
Unfortunately, AWS only earned $10.5 billion in operating income. This is 13.9% lower than a year earlier on sales of $43.5 billion. Assuming AWS generates $87 billion in 2023 revenue (revenue to date annualized), that’s revenue growth of 8.6%, considerably lower than 29% in 2022.
So, with companies looking to cut costs where they can, AWS is getting hit with requests for the company to help on that front. However, the company believes that the slowdown won’t continue. It considers that revenues lost from assisting customers to optimize costs will be made up with increased workloads and new customers from generative artificial intelligence (AI).
However, if you’re a shareholder, you can expect Amazon to increase its spending on AI drastically. At the end of September, it announced an initial $1.25 billion investment in the AI startup Anthropic. It will not have a board seat and is in a minority position. Amazon also has an option to invest an additional $2.75 billion.
Like OpenAI and
$Microsoft (MSFT.US)$ , this could be the goose that lays the golden egg for AWS and Amazon.