Amazon Had a Huge Quarter, but Can This Growth Be Sustained?


By: Noah Judd
07:23 05/01/2019

Amazon revealed record-breaking profits in their first quarter earnings— more than double the predictions, but can they sustain the growth? With revenue at $59.7 billion, the company is expected to continue its dominance over e-commerce, but it can only grow so much. Amazon is expected to enter a period of high spending that could slow profits and prove to be an obstacle in the future.

Amazon is the third most profitable company in the world, after Apple and Microsoft. It is clear the corporation will continue to be extremely profitable, but CEO Jeff Bezos is investing heavy in industries that may not pay off for quite some time— artificial intelligence, physical retail, and the smart home, to name a few.

These investments are resulting in Amazon relying heavily on advertising and cloud computing to maintain its momentum and less on its expansive e-commerce operation.

Currently, Amazon is beginning to spend more on infrastructure when compared to past reports— this could take a decent toll on their profits. This quarter, the company acquired Eero for a reported $97 million. Yet, they did not have significant product announcements of their own at CES this year. Instead, Amazon introduced 13 new ring products. With all of this in mind, it’s a good bet the company’s future will largely rely on the success of their smart home devices.

Brian Olsavsky, Amazon’s CFO said the company is investing more this year and spending big when compared to the year prior— all which points to slimmer profits. Olsavsky also revealed that Amazon is working on one-day free Prime shipping, although it could take some time to improve logistics in order to make it available to the masses.

The company’s biggest contributor to the bottom line continues to be Amazon Web Services— bringing in $7.7 billion in revenue, a 41 percent increase from the $2.2 billion in profit last year at the same time.

AWS is Amazon’s most pivotal asset. As it may be easy for someone to boycott amazon.com, it is much more difficult for someone to avoid all organizations that use Amazon Web Services.


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