Amazon.com, Inc. (NASDAQ:AMZN) had an impressive Q2 2024, surpassing expectations with an earnings per share (EPS) of $1.26, well above the forecast of $1.03. The company generated $148 billion in revenue, an 11% increase from the previous year, and an operating income of $14.7 billion, which is a remarkable 91% year-over-year rise.
These strong results show how effectively Amazon.com, Inc. (NASDAQ:AMZN) is managing economic challenges while finding growth opportunities. A key highlight was the significant jump in free cash flow, which rose by 664% to $51.4 billion over the past year.
This increase demonstrates the company’s operational efficiency and its ability to generate cash, which supports further investment in areas like Amazon Web Services (AWS) and AI-driven services.
AWS continued to perform well, with revenue growth accelerating from 17.2% in Q1 to 18.8% in Q2, fueled by trends in cloud adoption and rising demand for AI. Additionally, Amazon.com, Inc. (NASDAQ:AMZN)’s advertising business is thriving, bringing in over $50 billion in revenue last year.
Improvements in ad technology and the use of AI in advertising present strong growth opportunities, positioning Amazon favorably in this market. The company’s investments in generative AI and machine learning are also promising.
Products like Amazon SageMaker and Bedrock are establishing Amazon.com, Inc. (NASDAQ:AMZN) as a leader in cloud computing, catering to a growing number of developers and businesses interested in AI technologies.
Flexible AI Strategy Positions Amazon as a Leading Alternative to Azure
According to Gil Luria, managing director at D.A. Davidson, Amazon.com, Inc. (NASDAQ:AMZN)’s approach focuses on not depending on a proprietary large language model (LLM). Instead, they have developed a flexible system that allows customers to utilize various leading models, including those from Anthropic, Mistral, and Meta’s LLaMA.
This strategy meets customer needs without locking them into a single technology. Consequently, Amazon.com, Inc. (NASDAQ:AMZN) can effectively provide the necessary tools without having to compete directly with OpenAI’s advanced model.
Luria noted that just a year and a half ago, many customers were relying on Azure for their AI tools. However, the landscape has shifted, and now those customers can turn to Amazon for the solutions they need.
Amazon’s strategy is not to rely on a proprietary LLM. Instead, they’ve created a system that allows customers to work with various leading models—whether from Anthropic, Mistral, or Meta’s LLaMA. This flexibility meets customer demand and avoids locking them into a single technology.
As a result, Amazon can provide what its customers need without having a model as advanced as OpenAI’s. A year and a half ago, many customers were turning to Azure for AI tools; now they don’t need to, as Amazon can offer what they require.”
Gil Luria
Investor confidence is high, reflected in a year-to-date share price increase of 26.71% and a rise in hedge fund interest, with holders increasing to 308 in Q2 2024, up from 302 the previous quarter.
Together, these factors create a strong investment case for Amazon.com, Inc. (NASDAQ:AMZN), marking it as a standout performer in the Dow, especially as it continues to innovate and expand its presence across various sectors.
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