Amazon projects strong sales and big holiday shopping season

Shares rose after market close as a result of revenue exceeding forecasts

E-commerce giant Amazon reported stronger-than-expected third-quarter results on October 31. AFP

Amazon forecast profit and revenue in the current quarter that exceeded analysts’ estimates, on optimism for a strong holiday shopping season.

Operating income will be $16 billion to $20 billion in the period ending in December, the company said on Thursday in a statement.

Analysts, on average, projected $17.5 billion, according to data compiled by Bloomberg. Fourth-quarter sales will be as much as $188.5 billion, compared with an average estimate of $186.4 billion.

“As we get into the holiday season, we’re excited about what we have in store for customers,” chief executive Andy Jassy said in the statement.

The cloud business, which suffered record low sales growth last year, continued to regain momentum during the third quarter. Amazon Web Services revenue jumped 19 per cent to $27.5 billion, in line with estimates.

Operating income generated by the unit was $10.4 billion, exceeding analysts’ average projection of $9.12 billion.

Mr Jassy is betting heavily on the boom in generative artificial intelligence, which can create text, video and images based on simple user prompts.

Having spent the past couple of years wooing Wall Street by cutting costs and streamlining Amazon’s logistics operation, he is now pouring money into new data centre construction to support the AI boom, even as some investors worry the payoff may take years to materialise.

Amazon shares rose about 4 per cent in extended trading after closing at $186.19 in New York. The stock had increased 23 per cent this year through the close.