• by Laurie Sullivan  @lauriesullivan, August 1, 2024

Amazon reported that ad revenue climbed to $12.8 billion in the quarter ended June 2024 -- up from $9.5 billion a year earlier.

Analysts had expected Amazon’s ad business to generate $11.7 billion, per StreetAccount, a real-time equity intelligence company.

Advertising has emerged as one of the biggest profit generators, the company said Thursday. Most ad sales continue to come from sponsored product listings across its online store.

Amazon reported that total revenue rose 10% to nearly $148 billion compared with a year ago.

While online retail and cloud computing are still bigger businesses for Amazon, the company is counting on ads for more growth and profit as expansion slows elsewhere.

Online store sales grew just 5% year-over-year. Revenue from third-party seller services -- which includes commissions, and fulfillment and shipping fees -- accelerated faster, expanding 12% during the quarter.

Revenue from Amazon Web Services, the company’s cloud-computing business unit, grew about 19% to a higher-than-expected $26.28 billion.

The company has been investing in AI and cloud-computing infrastructure. Amazon Chief Financial Officer Brian Olsavsky said the company’s strong capital spending will continue — at least in the near term.

One of the company's major challenges is keeping spending down, especially on technology.

Amazon is boosting capital expenditures to invest in infrastructure for AI. Olsavsky said spending in the first six months of this year was about $30.5 billion, suggesting about $16.5 billion in the second quarter.

Despite all that spending, Amazon CEO Andy Jassy during the call talked about time and cost savings from Amazon Q Developer, a generative AI (GAI) assistant used to accelerate software development. Amazon Q has agent for code transformation capabilities that can migrate code in minutes.

Amazon has migrated more than 30,000 Java JDK applications in a few months, saving more than 4,500 years of development work for thousands of develop260 million in annual cost savings.

The company also gave guidance for the current quarter that fell short of analysts' expectations. 

Amazon has recently observed different online traffic patterns during specific events. It pointed to unusual business cycles for a weak forecast.

One reason that Amazon executives expect a slowdown in online shopping in the third calendar quarter is because consumers are distracted.

These events include the Paris Olympics, which began last month and continues through August 11, as well as the attempted assassination of former President Donald Trump at a Pennsylvania rally last month, and the lead up to the U.S. presidential election in November.