Titolo Amazon in corsa a Wall Street, after the publication of a solid quarterly report, which highlighted a net profit that jumped on an annual basis, to a level higher than estimates, and a turnover that was also growing.
Traders reward the AMZN title, which rises by over 7% on Wall Street, accompanying the rally which today also sees another US Big Tech as protagonist: Meta-Facebook, ergo the giant led by ceo Mark Zuckerbergwhose prices flywheel by over 15%.
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The US Big Tech stocks Amazon and Meta are toasting today on Wall Street to the improvement in their accounts, supported by cost cutting. Cost cutting that however, at a time when the debate on the risk that AI, artificial intelligenceends up making several jobs useless, is becoming increasingly heated.
Se the profitability of Meta and Amazon has strengthened, it was in fact precisely because of those shock maneuvers announced last year, which led the two giants to dismiss thousands of employees without too many problems. And it doesn’t mean that the cuts have ended.
Far from it, given what has emerged from some reflections on the phenomenon reported by the American press itself.
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Just as Meta did, Amazon has also started to prune in a sustained way its workforce in recent years.
Between late 2022 and mid-2023, Amazon has kicked something out like 27,000 employees, at the same time putting an end to some business bets that had not turned out to be right.
In general, Big Tech founded by Jeff Bezos it has cut spending in several other divisions.
The hemorrhaging of jobs has not even ended, given that, in the month of January, the American giant announced cuts in some of its units, including those of Prime Video, MGM Studios e Twitch.
But let’s get to the accounts published by the American giant.
During the fourth quarter of 2023, Amazon’s net income jumped to $10.6 billion, or $1 per share, compared to $278 million, or 3 cents per share, in the same period a year earlier.
The EPS, equal to $1, beat the $0.80 expected by the consensus of analysts consulted by LSEG (formerly Refinitiv).
Revenue grew 14% to $170 billion during the fourth quarter of 2023, doing better than the $166.2 billion expected by LSEG (formerly Refinitiv).
In particular, the Amazon Web Services (AWS) division grossed $24.2 billion, in line with what was estimated by analysts interviewed by StreetAccount, while advertising revenue amounted to $14.7 billion, better than the $14.2 billion expected by the same consensus.
Amazon: first quarter 2024 guidance. The key factors of the sales boom
Not only. Wall Street promoted the guidance announced by the group.
Amazon said it expects the first quarter of 2024 revenue between $138 and $143.5 billion, up 8-15%compared to the $142.1 billion consensus estimate.
The CFO financial director Brian Olsavsky He also told reporters that Big Tech will continue to take a careful approach when choosing any new investments.
“We will continue to invest in new projects and new areas and products that resonate with consumers – said CFO Olsavsky – And if we can find ways to be efficient and do more with less, then we will.”
The fourth quarter of 2023, it should be noted, proved positive for Amazon due to two key factors: the holiday shopping season, which led consumers to click more often the ‘Buy.’ button‘ ,and the event Prime Day in October.
In both cases, the giant confirmed, sales were confirmed to be better than estimates.
“This fourth quarter made history in the holiday shopping seasons and concluded a robust 2023 for Amazon – commented Amazon’s number one, CEO Andy Jassy, according to what emerges from the press release with which Big Tech announced the accounts – Entering 29024, our teams are guaranteeing results at a fast pace, and there’s a lot to be excited about in front of us.”
Returning to turnover of the Amazon Web Services division, the trend for the fourth quarter of 2023 was an increase of 13% to $24.2 billion, in line with Wall Street expectations.
The pace of growth was faster than the previous quarter’s +12% acceleration, but slower than the fourth quarter of 2022, when AWS sales increased 20%.
Amazon has confirmed itself as one of the US Big Techs to be at the forefront of betting on AI (artificial intelligence) so much so that, shortly before the publication of the profits, which took place after the end of the trading day on Wall Street yesterday, the group announced an AI-powered shopping assistant, named Rufus.
The tool has currently been launched for testing in a group of American customers.
But if developed globally, Rufus could allow every Amazon user to get help research and purchase the products that are best suited to your needs.
Potential buyers will be able to ask a specific question in the “Search” section of the Amazon APP, by typing the request or saying it aloud.
At that point it will open a window with a chat at the bottom of the screen, which customers can use to ask all kinds of questions about the product categories they are interested in.
“Rufus will significantly improve customers’ ability to find and discover the best products that meet their needse,” Amazon itself reported.
AI hand in hand with a flurry of layoffs: the New Normal?
Having said this, the debate on the risk is further heated AI (artificial intelligence) increasingly rhymes with layoffs.
An article published a few days ago took stock of the situationfocusing on what emerged in January and over the last year.
Facts:
“Last year, from every point of view, the hi-tech industry has been hit by a bloodbath: more than 26o,000 jobs have vanished”, confirming the sharper decline of jobs in 12 months for Silicon Valley compared to the bursting of the dot-com speculative bubble in early 2000”, we read in the article by NPR (National Public Radio) “Nearly 25,000 tech workers were laid off in the first weeks of 2024. Why is that?” .
The leaders justified it mass layoffs citing those hirings, evidently excessive, “which began immediately after the darkest period of the pandemic”.
Other reasons given were “high inflation in the United States and weak consumer demand.”
But now, the article notes, the situation is different:
“The workforce of high-tech companies has largely returned to pre-pandemic levels, inflation has halved compared to the same period last year, and consumer confidence is recovering.”
Despite this,” in the first four weeks of this year, nearly 100 hi-tech companies, incluse Meta, Amazon, Microsoft, Google, TikTok e Salesforce they laid off something like 25,000 workers, according to data from layoffs.fyi, which tracks layoff trends in the tech sector.
The question arises spontaneously: why do the cuts continue?
Jeff Shulman, consultant at the University of Washington’s Foster School of Business, gave a goosebump-inducing response:
“Layoffs appear to support stocks, therefore these companies see no reason to stop.”
Not only that: “these companies are getting away with it because everyone is cutting back. And they’re getting away with it also because it’s the new normal.”
Roger Lee, who runs the same company layoffs.fyi. , commented: “We are seeing these hi-tech companies that they are almost rewarded by Wall Street for cost discipline. And that’s a phenomenon that could encourage those companies, and other technology companies, to cut costs and lay off employees”.
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