AWS Growth Continues To Taper in Q1 Earnings

Amazon Web Services (AWS), despite posting record revenues in Amazon.com’s first quarter-earnings reports on Thursday, is showing signs that it is on the decline.
According to Wall Street estimates, the cloud unit earned $3.66 billion during the period, an increase of 3.5% over the previous quarter. This figure is also 43% higher year-over-year — a significant jump, even by most companies’ standards.
AWS’ quarterly growth rates have fallen every quarter since Q2 fiscal 2015, when AWS’ revenue grew by 81%. Since then, its year-over-year growth rate has slowed with each earnings report. The previous quarter saw AWS revenue grow by 47% year-over-year. This was the slowest growth since AWS started to separate the unit.
Q1 operating income increased by 48% year-over-year to $890million, but fell by 3.9% compared to the previous quarter’s operating profit of $926million.
Despite signs that AWS may be slowing down, it is still Amazon.com’s fastest-growing segment. The two other segments of the retail giant, North America and International ecommerce units, saw growth of 24% and 16%, respectively, year-over-year. AWS accounts for ten percent of Amazon.com’s total revenue.
Executives touted several recent AWS milestones in the earnings report, including the launches of two productivity-oriented solutions — the Chime unified communications service, and Connect, a cloud-based customer service platform. The company also highlighted some of the product announcements made at the AWS Summit in San Francisco. These included the availability of the Lex AI language services and the launch tools like CodeStar and DynamoDB Accelerator.
Amazon.com’s first quarter revenue was $35.7 billion, beating analyst estimates of $35.4 trillion. The expected $1.13 was the expected earnings per share. Instead, it came in at $1.48. Operating income was $1.0 million.