While Amazon has had a rough year, AWS remains a reliable cash cow • TechCrunch
Back in March 2020, when the world closed down, Amazon became the world’s go-to online store. When people couldn’t leave their homes, it became imperative that goods get to them, and Amazon thrived. Money flowed into his coffers, his stock price soared, and he hired like crazy and built warehouses to meet the growing demand.
According to figures from Statista, the company started the pandemic with around 840,000 employees in the first quarter of 2020. In the first quarter of 2022, it had more than 1.6 million workers. The problem was that as the pandemic loosened its grip on public life, people stopped buying everything online and went back to physical retail.
Amazon CEO Andy Jassy certainly seems to understand that the market has changed, and he’s instructed his managers to look for places to cut expenses and lower operating costs, which many large organizations are doing. in a period of great economic uncertainty.
Amazon’s efforts included, if reports are accurate, cutting up to 10,000 short-term jobs to offset hiring that occurred at the height of the pandemic.
From a stock perspective, the company has given up nearly all of the gains it has recouped from the pandemic, losing nearly 50% of its value this year, according to CNBC. That means Jeff Bezos is just a little less wealthy than he once was, and his ex, MacKenzie Scott, has a little less to give. Jassy, meanwhile, has a lot more headaches to deal with and pressure to cut operating costs.
Through it all, AWS, the cloud arm of Amazon, which Jassy ran before he was promoted to the corner office, has continued to operate at the same high level it always has. But even AWS reported a slowdown in the third quarter as companies tried to cut cloud costs.
Consider that in Q3 2022, the most recent quarter, AWS revenue hit $20.5 billion, below the $21.1 billion analysts expected. That might not seem like a lot, but cloud computing was one of the few areas of very strong growth, so failure was a big deal.
That said, you can’t lose sight of the fact that AWS is now on the verge of becoming an $80 billion company, so it’s not exactly something to hang on to, and the consensus is that the he cloud business still has plenty of room for growth despite external macroeconomic conditions.
In other words, AWS is likely to be fine regardless of currency issues, slowing growth, or customers expecting only modest increases in IT spending in the new year. Jassy may have to cut costs across the business, but AWS is likely to be largely spared this exercise.