Amazon earnings beat expectations with strong cloud growth
Amazon's first-quarter earnings surpassed expectations, driven by strong growth in its cloud and advertising businesses, despite a significant year-over-year drop in free cash flow due to heavy investments in AI and its satellite internet project, Project Kuiper. Revenue from online stores and advertising exceeded analyst estimates, and the company raised its sales and operating income forecasts for the second quarter. Amazon also announced plans to acquire Globalstar for $11.57 billion to bolster its satellite capabilities and enable direct-to-device connectivity, while Prime Day is set for June this year.
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Amazon said property and equipment expenses in the first quarter reached $44.2 billion, which was above Wall Street's projected $43.6 billion, according to FactSet. Meanwhile, its free cash flow for the past twelve months fell to $1.2 billion, a 95% decrease year over year, primarily because of its AI investments, the company said. The company's capex spending is also being pushed higher because of its investments in its nascent internet-from-space service, called Leo. Amazon is aiming to begin commercial service in the third quarter of this year, Chief Financial Officer Brian Olsavsky said on a call with investors.Amazon needs to make enough satellites and book more rocket launches to build out its constellation, which will eventually total roughly 7,700 satellites.
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