AWS generative AI expansions

Previously emphasized early-stage multibillion-dollar run rate, Bedrock platform enhancements, and custom silicon strategies in Q2, Q1, and Q4 with a bullish outlook ( " " " " " " " " " " " " " ).

Triple-digit growth in AI revenue, highlighting Trainium2, Bedrock updates, and strong customer adoption ( " " " " ).

Recurring, sentiment remains very bullish, seen as a large future driver

Cost optimization and operational efficiency

Consistent focus in Q2, Q1, and Q4 on regionalizing networks, reducing cost to serve, and streamlining fulfillment ( " " " " " " " " " " ).

Achieved significant improvements in fulfillment costs, same-day expansions, and AWS cost control ( " " " " ).

Recurring, continues to show strong progress, remains a bullish factor

Higher capital expenditures for AI and AWS

In Q2, Q1, and Q4 calls, Amazon cited substantial increases in CapEx tied to AWS regions and custom AI chips, viewing AI as a long-term growth driver ( " " " " " " " " " ).

Spending about $75B in 2024, mostly on data centers and AI infrastructure, citing the once-in-a-lifetime generative AI opportunity ( " " ).

Recurring, remains bullish with large-scale commitments for AI

International segment profitability fluctuations

Noted quarter-to-quarter fluctuations, but a positive trend in Q2, Q1, and Q4 driven by optimizing costs, improving inventory placement, and Prime benefits ( " " " " " ).

$1.3B operating income, up $1.4B year-over-year, driven by lower cost to serve, advertising gains, and faster delivery ( " ).

Recurring, profitability continues to improve, sentiment more bullish

Margin expansions in AWS and stores

Steadily improving in Q2, Q1, and Q4 with cost controls, favorable server life adjustments, and regionalization in stores leading to higher margins ( " " " " " " " ).

AWS operating income of $10.4B (+$3.5B YoY), margin at 38%; North America margin up 100 bps to 5.9%, International margin up 390 bps to 3.6% ( " " " ).

Recurring, margins maintain upward trajectory, supports bullish sentiment

Grocery expansions

In Q2, Q1, and Q4, Amazon introduced various Prime grocery benefits, tested new Fresh formats, and nonperishables growth, signaling ongoing grocery strategy ( " " " " " ).

Launched unlimited grocery delivery for $9.99/month covering Whole Foods Market, Fresh, and third-party partners ( " ).

Consistent expansions, new membership offers, indicating steady investment

Healthcare expansions (Pharmacy)

In prior calls, spotlight on same-day Rx delivery, RxPass, and integration with One Medical for Prime members, showing steady healthcare growth ( " " " " ).

Emphasized faster delivery (95% in 2 days), planning to expand to 20 new cities in 2025, focusing on adherence benefits ( " ).

Recurring, expansions accelerate, indicating a key growth vertical

Kuiper

Previous quarters emphasized accelerated satellite manufacturing, partnerships with enterprise customers, and beta tests set for late 2024–2025, with significant long-term potential ( " " " " " ).

No mention in Q3 2024.

No mention this quarter, focus seems shifted to other expansions

Consumer trading down to lower ASP

Previously discussed cautious spending and trading down trends, with increased focus on deals and low ASP selection across Q2, Q1, and Q4 as macro conditions stayed uncertain ( " " " " ).

Customers remain price-conscious, lower ASP items growing, especially in everyday essentials and fast delivery categories, driving larger baskets ( " " " ).

Recurring, caution remains, but seen as positive for volume and loyalty

AWS capacity constraints

Highlighted capacity challenges in prior calls, balancing under- vs. over-provisioning in AI, with custom silicon investments as partial relief ( " ). No direct mention in Q1 or Q4 about constraints specifically, but recognized rapid AI growth requiring more capacity.

Andrew Jassy noted insufficient chip supply to meet strong AI demand; working with NVIDIA and ramping Trainium2 to address constraints ( " ).

Still present, underlines strong demand and necessity for further investments

Trainium2

Discussed in Q2, Q1, and Q4 as a key custom silicon path to reduce AI costs; larger volumes expected late 2024/early 2025, offering 4x faster training vs. predecessor ( " " " " " " ).

Set to ramp up in upcoming weeks, with high customer interest due to price-performance benefits, leading to increased production orders ( " " ).

Continuing expansions, a major AI training focus

No share repurchases or dividends

In Q1 and Q4, no updates on dividends or buybacks; Amazon prefers reinvesting in growth and debt repayment ( " " ).

No mention for Q3 2024.

No direct mention, approach remains unchanged

Advertising expansions

Demonstrated strong double-digit growth in Q2, Q1, and Q4 from streaming TV ads, sponsored ads, and consistent ad relevancy improvements; a key profit contributor ( " " " " " ).

Generated $14.3B (18.8% YoY growth), driven by sponsored products and Prime Video ads, plus generative AI creative tools ( " " ).

Recurring expansions, remains robust profit driver