Amazon.com Inc. appears to be back in business after posting second-quarter earnings results today that easily topped Wall Street’s estimates.

It followed up with a forecast of accelerating revenue growth in the current quarter too, sending its almost 10% higher in extended trading.

The online retail and cloud computing infrastructure giant reported earnings before certain costs such as stock compensation of 65 cents per share, well ahead of Wall Street’s target of just 35 cents per share. Revenue rose 11%, to $134.4 billion, easily topping Wall Street’s forecast of $131.5 billion.

Amazon said it delivered a net income of $6.7 billion in the quarter, reversing the $2 billion loss it recorded in the same period last year. Last year’s loss was the result of Amazon marking down a significant investment in the electric car company Rivian Automotive Inc.

Today’s earnings beat was the biggest for Amazon since the fourth quarter of fiscal 2020, and the results are probably the strongest indication that cost-cutting measures introduced over the last year are beginning to pay off. Last year, Amazon embarked on the most significant job-cutting spree in its history, ditching over 27,000 across the organization to reduce its global headcount by 4%. At the same time, Amazon put the brakes on new corporate hires, and has looked to implement further spending cuts in each of its business units.

The return to double-digit revenue growth is significant, because Amazon had only achieved this once in its previous six earnings reports. In a statement, Amazon Chief Executive Andy Jassy (pictured) said one reason for the company’s improved fortunes was the strong performance of Amazon Web Services Inc., the cloud computing infrastructure business that accounts for the bulk of its profits.

“Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment,” Jassy said. “AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative AI releases that make it much easier and more cost-effective for companies to train and run models, customize Large Language Models to build generative AI applications and agents, and write code much more efficiently with CodeWhisperer.”

Revenue from AWS rose 12%, to $22.1 billion, ahead of Wall Street’s $21.8 billion projection but still the slowest growth rate since it began reporting the segment separately in 2015. The unit generated 70% of Amazon’s total $7.7 billion operating profit. On the other hand, analysts will have noted that AWS grew more slowly than the 16% growth seen in the prior quarter.

Still, the numbers were better than most had hoped for, and it suggests that AWS will continue to improve going forward even as enterprise customers look to reduce nonessential cloud spending. The company has been boosted by strong interest in its generative artificial intelligence offerings.

“I don’t see this as a negative, since AWS actually beat Wall Street’s 10% year-over-year growth target,” said Dave Vellante, chief analyst at SiliconANGLE Media’s sister market research unit Wikibon. “There’s still caution amongst the buyers and gen AI spend hasn’t kicked in yet. I believe it will be more meaningful by Q4 and will provide momentum in 2024 for AWS and other cloud players in particular.”

Further optimism can be drawn from Microsoft Corp.’s and Google LLC parent Alphabet Inc.’s earnings last week. Then, both companies posted strong cloud numbers, benefiting from growing interest in the infrastructure and services needed to develop generative AI applications. But cloud spending is still somewhat muted. DigitalOcean Holdings Inc., a fairly minor player in the cloud infrastructure business that serves smaller companies, today posted revenue growth of 27% as it delivered its second-quarter results, but its stock plunged 22% in late trading as it cited slower cloud spending growth.

Looking to the third quarter, Amazon said it expects revenue of between $138 billion and $143 billion, representing growth of 9% to 13%. Wall Street’s model calls for $138.25 billion in sales.

Amazon said in its earnings release that AI products and services are being used by numerous enterprise customers, including HSBC Holdings plc., Koninklijke Philips N.V. and Old Mutual Ltd.

In addition, Amazon is using AI-based machine learning algorithms to beef up its increasingly important Amazon Ads business. The new algorithms, introduced during the quarter, help advertisers to reach “previously unaddressable audiences” at a time when the industry moves away from third-party browser cookies. Amazon’s ad business is an important source of revenue, generating $10.7 billion in sales during the quarter, up 22% from a year earlier.

Photo: SiliconANGLE