Amazon is a global technology company that operates in various sectors, including e-commerce, cloud computing, and digital streaming. The company organizes its business activities into three main segments: North America, International, and Amazon Web Services (AWS), serving a wide range of customers such as consumers, sellers, developers, enterprises, content creators, advertisers, and employees **[0001018724-24-000008_amzn-20231231.htm:3]** **[0001018724-24-000008_amzn-20231231.htm:60]**. Amazon's diverse product lines include online and physical retail stores, third-party seller services, advertising services, subscription services, and AWS, which provides on-demand technology services **[0001018724-24-000008_amzn-20231231.htm:97]**.

1. **Online Stores** - Offers a wide range of products and digital media content through its e-commerce platform.
2. **Third-Party Seller Services** - Provides a marketplace for sellers, including services like commissions and fulfillment.
3. **Amazon Web Services (AWS)** - Delivers on-demand cloud computing and technology services to businesses and developers.
4. **Advertising Services** - Sells advertising space and services to various clients, enhancing their visibility and reach.
5. **Subscription Services** - Includes offerings like Amazon Prime and digital content subscriptions, providing exclusive benefits and content.
6. **Physical Stores** - Operates retail locations where customers can purchase items directly in-store.

cb4ef64463844ed0ccc7fdd1c13199552631b0f2f37f7ae21a23adae4637a254

e2a6f5e468444ee9a145be0d2981e86b70e59fbe236f8e3009a6195eb134fd18

| Metric (in billions) | Q1 2023 | Q2 2023 | Q3 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|
| Shipping Costs       | **$19.9**  **[0001018724-23-000008_amzn-20230331.htm:33]**  | **$20.5**  **[0001018724-23-000012_amzn-20230630.htm:34]**  | **$21.8**  **[0001018724-23-000018_amzn-20230930.htm:36]**  | **$21.8**  **[0001018724-24-000083_amzn-20240331.htm:32]**  | **$22.0**  **[0001018724-24-000130_amzn-20240630.htm:36]**  | **$23.5**  **[0001018724-24-000161_amzn-20240930.htm:38]**  |

ec7af6ed7056cc5f87d201fb89754bf80a784ab2b37c6129ab0e325a7a4a79f4

868b5c837052282ef69d8fd1cdaef382476416291ffc7ce4b2dea337975f31c3

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (CapEx) (USD, millions)

Proceeds from / Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

aaa0f5e63a05cd1b02f9bc3483363b9db8ff8011ae052da6fb3e11ce408f505b

| Product Segment / Quarter | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Online Stores ($M)**    | N/A     | **51,096**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**  | N/A     | N/A     | N/A     | N/A     | N/A     | **61,411**  **[0001018724-24-000161_amzn-20240930.htm:28]**  |
| **Physical Stores ($M)**  | N/A     | **4,895**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**   | N/A     | N/A     | N/A     | N/A     | N/A     | **5,228**  **[0001018724-24-000161_amzn-20240930.htm:28]**   |
| **Third-party Seller Services ($M)** | N/A | **29,820**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**  | N/A | N/A | N/A | N/A | N/A | **37,864**  **[0001018724-24-000161_amzn-20240930.htm:28]**  |
| **Advertising Services ($M)** | N/A | **9,509**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**  | N/A | N/A | N/A | N/A | N/A | **14,331**  **[0001018724-24-000161_amzn-20240930.htm:28]**  |
| **Subscription Services ($M)** | N/A | **9,657**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**  | N/A | N/A | N/A | N/A | N/A | **11,278**  **[0001018724-24-000161_amzn-20240930.htm:28]**  |
| **AWS ($M)**              | **21,400**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**  | **21,354**  **[0001018724-23-000008_amzn-20230331.htm:24]**  | **22,100**  **[0001018724-23-000010_amzn-20230630xex991.htm:0]**  | **23,100**  **[0001018724-23-000016_amzn-20230930xex991.htm:1]**  | **24,200**  **[AMZN_3371617_6]**  | **25,000**  **[0001018724-24-000081_amzn-20240331xex991.htm:0]**  | **26,300**  **[0001018724-24-000128_amzn-20240630xex991.htm:0]**  | **27,452**  **[0001018724-24-000161_amzn-20240930.htm:28]**  |
| **Other ($M)**            | N/A     | **1,027**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**   | N/A     | N/A     | N/A     | N/A     | N/A     | **1,313**  **[0001018724-24-000161_amzn-20240930.htm:28]**   |

fec3d303fec2233a327f44f806f1e058da2564499ee1155686189b2e8eb4462c

cce06214989d318a97f45a35799b8239b1a44f219206b8b5623ce914fe1c804f

| Metric [Unit: USD Billion] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| North America              | **93.4**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**  | **76.9**  **[0001018724-23-000008_amzn-20230331.htm:31]**  | **82.5**  **[0001018724-23-000010_amzn-20230630xex991.htm:0]**  | **87.9**  **[0001018724-23-000016_amzn-20230930xex991.htm:1]**  | **105.5**  **[0001018724-24-000006_amzn-20231231xex991.htm:0]**  | **86.3**  **[AMZN_3381556_6]**  | **90.0**  **[0001018724-24-000128_amzn-20240630xex991.htm:0]** **[0001018724-24-000130_amzn-20240630.htm:34]**  | **95.5**  **[0001018724-24-000158_amzn-20240930xex991.htm:0]** **[0001018724-24-000161_amzn-20240930.htm:36]** **[0001018724-24-000158_amzn-20240930xex991.htm:11]**  |
| International              | **34.5**  **[0001018724-23-000002_amzn-20221231xex991.htm:0]**  | **29.1**  **[0001018724-23-000008_amzn-20230331.htm:31]** **[0001018724-23-000006_amzn-20230331xex991.htm:1]**  | **29.7**  **[0001018724-23-000010_amzn-20230630xex991.htm:0]**  | **32.1**  **[0001018724-23-000016_amzn-20230930xex991.htm:1]** **[0001018724-23-000018_amzn-20230930.htm:34]**  | **40.2**  **[0001018724-24-000006_amzn-20231231xex991.htm:0]**  | **31.9**  **[AMZN_3381556_6]**  | **31.7**  **[AMZN_3395769_5]**  | **35.9**  **[AMZN_3405212_5]**  |

5de61a4d0d005573b27fea90468a3daaf368b978568ce2149c27b187885abc2e

1. With the significant increase in AI-related workloads driving AWS demand, how is Amazon addressing the current capacity constraints in AWS, especially given the ongoing shortage of high-performance chips like NVIDIA's GPUs, and how might this impact your ability to meet customer demand in the near term?

2. AWS operating margins have seen fluctuations due to the level of investments; can you provide more clarity on how the increased spending on AI infrastructure and custom silicon like Trainium and Inferentia will impact AWS profitability in the coming quarters?

3. You mentioned a shift towards lower average selling price (ASP) items and consumers being more price-conscious; how does this trend affect your overall retail margins, and what strategies are in place to ensure profitability despite the potential pressure from increased sales of lower ASP products?

4. The third-party seller unit mix declined slightly in Q3, which is unusual; can you explain the specific factors contributing to this shift, and what steps are you taking to support third-party sellers and potentially reverse this trend?

5. While international segment operating income has improved, emerging markets may still be facing challenges; can you elaborate on the specific initiatives being undertaken to drive profitability in these regions, and what hurdles do you anticipate in aligning international margins with North America over time?

43ef459302042c129577384fd1d41e4d12728b317f1bb1460f32834bc64467a3

0e1cfcb67835debec40ed3742d6c6ff1bb382fca1899a47e4efa25348b43c8c6

- Physical, e-commerce, and omnichannel retailers, publishers, vendors, distributors, manufacturers, and producers of the products Amazon offers and sells to consumers and businesses  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Publishers, producers, and distributors of physical, digital, and interactive media of all types and all distribution channels  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Web search engines, comparison shopping websites, social networks, web portals, and other online and app-based means of discovering, using, or acquiring goods and services, either directly or in collaboration with other retailers  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Companies that provide e-commerce services, including website development and hosting, omnichannel sales, inventory and supply chain management, advertising, fulfillment, customer service, and payment processing  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Companies that provide information technology services or products, including on-premises or cloud-based infrastructure and other services  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Companies that design, manufacture, market, or sell consumer electronics, telecommunication, and electronic devices  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Companies that sell grocery products online and in physical stores  **[0001018724-24-000008_amzn-20231231.htm:4]** .
- Companies that provide advertising services, whether in digital or other formats  **[0001018724-24-000008_amzn-20231231.htm:4]** .

cc606f86ed7e3736bd7608b1cd28b64c2180d9e235a5773743d487863cb4ee6b

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

Shipping Costs

e753b2e921ba5e1cb66d38257507fed2166e61a10b4fdda98148303dbb567dd1

| Name                  | Position                                                      | Start Date | Short Bio                                                                                                                                                                                                 |
|-----------------------|---------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Jeffrey P. Bezos      | Executive Chair                                               | July 2021  | Jeffrey P. Bezos is the **Founder and Executive Chair** of Amazon. He founded Amazon.com in **1994** and has served as Chair of the Board since its founding. Bezos served as CEO from **May 1996 until July 2021**  **[0001104659-24-045910_tm2329302d4_def14a.htm:15]** **[0001018724-24-000008_amzn-20231231.htm:6]** **[0001104659-23-044708_tm233694d2_def14a.htm:10]** .                  |
| Andrew R. Jassy       | President and Chief Executive Officer                         | July 2021  | Andrew R. Jassy has been the **President and Chief Executive Officer** of Amazon since **July 2021**. He joined Amazon in 1997 and founded AWS, serving as its CEO from April 2016 to July 2021  **[0001104659-24-045910_tm2329302d4_def14a.htm:16]** **[0001018724-24-000008_amzn-20231231.htm:6]** **[0001104659-23-044708_tm233694d2_def14a.htm:12]** .                                       |
| Douglas J. Herrington | CEO Worldwide Amazon Stores                                   | July 2022  | Douglas J. Herrington has served as the **CEO Worldwide Amazon Stores since July 2022**. He was previously the Senior Vice President, North America Consumer from January 2015 to July 2022  **[0001018724-24-000008_amzn-20231231.htm:6]** .                                                |
| Brian T. Olsavsky     | Senior Vice President and Chief Financial Officer             | June 2015  | Brian T. Olsavsky has served as **Senior Vice President and Chief Financial Officer** of Amazon.com, Inc. since **June 2015**. He was Vice President, Finance for the Global Consumer Business from December 2011 to June 2015  **[0001018724-24-000008_amzn-20231231.htm:6]** .             |
| Shelley L. Reynolds   | Vice President, Worldwide Controller, and Principal Accounting Officer | April 2007 | Shelley L. Reynolds has served as **Vice President, Worldwide Controller, and Principal Accounting Officer** at Amazon since **April 2007**. She is responsible for overseeing Amazon's accounting operations and financial reporting  **[0001018724-24-000008_amzn-20231231.htm:6]** .       |
| Adam N. Selipsky      | CEO Amazon Web Services                                       | July 2021  | Adam N. Selipsky has served as the **CEO of Amazon Web Services (AWS) since July 2021**. He was previously the Senior Vice President of AWS from May 2021 until July 2021 and President and CEO of Tableau Software from September 2016  **[0001018724-24-000008_amzn-20231231.htm:6]** .    |
| David A. Zapolsky     | Senior Vice President, Global Public Policy and General Counsel | May 2023   | David A. Zapolsky has served as **Senior Vice President, Global Public Policy and General Counsel** at Amazon since **May 2023**. He has been with Amazon in various roles since **April 2002**  **[0001018724-24-000008_amzn-20231231.htm:6]** .                                             |

4b7bee1fc10b4a9665f84c091ea27b01286435c8a09649a2ec48a218e1ba9ab8

North America

International

United States

Germany

United Kingdom

Japan

Rest of World

Total Revenue

a40837968bf7a1a0b36de3f04509b724e63c265ee2ea5ccbfff97051232dc687

| Program Details          | Program 1      |
|--------------------------|----------------|
| Approval Date            | March 2022  **[0001018724-24-000161_amzn-20240930.htm:23]**  |
| End Date/Duration        | No fixed expiration  **[0001018724-24-000161_amzn-20240930.htm:23]**  |
| Total additional amount  | $10.0 billion  **[0001018724-24-000161_amzn-20240930.htm:23]**  |
| Remaining authorization amount | $6.1 billion as of September 30, 2024  **[0001018724-24-000161_amzn-20240930.htm:23]**  |
| Details                  | Replaces a previous $5.0 billion authorization from February 2016  **[0001018724-24-000161_amzn-20240930.htm:23]**  |

b5c20a212f539699008a0cc2973e6ce8ef9a2bb44c07455d2fb88c4d93df4095

| Name              | Start Date | End Date | Reason for Change |
|-------------------|------------|----------|-------------------|
| Ernst & Young LLP | 1996  **[0001018724-24-000008_amzn-20231231.htm:55]**  | Present  | Current auditor   |

535bc36e63ef309a73b74bf22e5cc39e4d35b0ba805c116f96b7eada50c311c8

f2df67a5c6065dbe47327f02023235e21ef52d3186ec5d591195d5f3f8e3feef

- Total Revenue: $158.877 billion (+11% YoY)  **[0001018724-24-000161_amzn-20240930.htm:28]**   
- North America: $95.537 billion (+9% YoY)  **[0001018724-24-000161_amzn-20240930.htm:28]**   
- International: $35.888 billion (+12% YoY)  **[0001018724-24-000161_amzn-20240930.htm:28]**   
- AWS: $27.452 billion (**+19% YoY**)  **[0001018724-24-000161_amzn-20240930.htm:28]**   
- Online Stores: $61.411 billion (+7% YoY)  **[0001018724-24-000161_amzn-20240930.htm:28]**   
- Third-party Seller Services: $37.864 billion (+10% YoY)  **[0001018724-24-000161_amzn-20240930.htm:28]**   
- Advertising Services: $14.331 billion (**+19% YoY**)  **[0001018724-24-000161_amzn-20240930.htm:28]**   
- Operating Income: $17.411 billion (**+56% YoY**)  **[0001018724-24-000161_amzn-20240930.htm:3]** **[0001018724-24-000161_amzn-20240930.htm:2]**   
- Net Income: $15.328 billion (+55% YoY)  **[0001018724-24-000161_amzn-20240930.htm:3]** **[0001018724-24-000161_amzn-20240930.htm:2]**   
- Diluted EPS: $1.43 (+52% YoY)  **[0001018724-24-000161_amzn-20240930.htm:3]** **[0001018724-24-000161_amzn-20240930.htm:2]**   

e52a9f2ec8f18fcd6da3515ee079a821a9d565dc96a973ecdf7e2081330d73a5

0932c2204ee1f6260f6667fe126e2ac557aa54f5eddb506363179bf6d27eb1bf

Shipping Costs (USD billions)

Free cash flow (USD millions)

Free cash flow less principal repayments of finance leases and financing obligations (USD millions)

Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations (USD millions)

ae4eb7e5dec53d48ac7fcd0a140bf14e98fb435d14a2d9f71c5b4aa2d09cb30f

| Year | Amount Due (in billions) | Debt Type         | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|------------------------|------------------------|------------------------------------------------------------------------------------|
| 2024     | 4.0                          | Unsecured Senior Notes | 3.80 - 4.95           | 7.3% = (4.0 / 54.89) * 100 **[0001018724-24-000161_amzn-20240930.htm:21]**                                                |
| 2025     | 13.0                         | Unsecured Senior Notes | 3.15 - 5.20           | 23.7% = (13.0 / 54.89) * 100 **[0001018724-24-000161_amzn-20240930.htm:21]**                                              |
| 2026     | 15.0                         | Unsecured Senior Notes | 0.80 - 2.70           | 27.3% = (15.0 / 54.89) * 100 **[0001018724-24-000161_amzn-20240930.htm:21]**                                              |
| 2027     | 11.25                        | Unsecured Senior Notes | 1.00 - 3.25           | 20.5% = (11.25 / 54.89) * 100 **[0001018724-24-000161_amzn-20240930.htm:21]**                                             |
| 2028     | 8.25                         | Unsecured Senior Notes | 3.00 - 4.10           | 15.0% = (8.25 / 54.89) * 100 **[0001018724-24-000161_amzn-20240930.htm:21]**                                              |
| 2029+    | 9.0                          | Unsecured Senior Notes | 0.80 - 5.20           | 16.4% = (9.0 / 54.89) * 100 **[0001018724-24-000161_amzn-20240930.htm:21]**                                               |

540206451e262931681f2e7a003de1497bb67252c0e171c4b538fe6ca2d2e076

1. **AWS Growth Outlook**  
   **Q:** Is AWS growth acceleration sustainable in the back half?  
   **A:** Management believes that while predicting growth rates is challenging, they have seen the lion's share of cost optimization happen, and factors like companies moving from on-premises to the cloud and significant demand in generative AI suggest that AWS has strong growth potential ahead. The business currently has a **$105 billion revenue run rate**, and about **90% of global IT spend is still on-premises**.  **[AMZN_3395769_9]** 

2. **AWS Operating Margins**  
   **Q:** What drove strong AWS operating margins, and outlook?  
   **A:** AWS operating margins improved to the **mid-30% range in Q2**, up from the mid-20% range last year, driven by cost reductions and efficiencies. An adjustment to server useful life contributed about **200 basis points** of margin year-over-year. Management notes margins may fluctuate quarter-to-quarter but continues to work on the cost structure.  **[AMZN_3395769_11]** 

3. **Retail Gross Margins and Cost Management**  
   **Q:** Were retail gross margins pressured due to discounting or Kuiper?  
   **A:** The segment operating margins decreased **20 basis points** sequentially from Q1 to Q2, partly due to a **$1.8 billion** increase in stock-based compensation expense. Retail margins improved despite this, but investments in areas like Project Kuiper led to higher expenses in Q2. Management is focused on expanding margins in the stores business by reducing cost to serve through initiatives like regionalization of the U.S. network.  **[AMZN_3395769_8]** 

4. **AWS Investment in AI and Custom Silicon**  
   **Q:** Are you overinvesting or underinvesting in AI, and how do you view custom silicon investments?  
   **A:** Management explains that while investing significantly in AI infrastructure, they would like to have more capacity due to high demand, believing AI will be a very large business. On custom silicon, their Graviton chips offer **30% to 40%** better price performance, and new chips like Trainium and Inferentia are compelling solutions amid GPU supply constraints. They see good return profiles on these investments.  **[AMZN_3395769_7]** 

5. **Macro Trends Impact on Retail Business**  
   **Q:** Did macro trends impact Q2, and how does that influence Q3 outlook?  
   **A:** Consumers continue to be careful with spending, trading down to lower average selling price (ASP) products, and seeking deals. This trend continued into Q2 and is expected to persist into Q3. Despite this, there was very strong unit volume growth, with accelerated North America unit growth when adjusting for leap year. Lower ASP products are a larger mix now.  **[AMZN_3395769_12]** 

6. **Amazon Pharmacy Adoption**  
   **Q:** What's the status of Amazon Pharmacy adoption beyond early users?  
   **A:** The pharmacy business is growing quickly and gaining more resonance with customers, thanks to improvements in customer experience over the last 18 months. Initiatives like expanding the RxPass program to Medicare members, offering up to **60 medications for $5 a month**, and launching same-day medication delivery in eight cities are driving growth. Plans are to expand to over a dozen cities by year-end.  **[AMZN_3395769_9]** 

7. **AWS Backlog and Workload Migration**  
   **Q:** Can you share the AWS backlog number and comment on workload migrations?  
   **A:** The AWS backlog at the end of Q2 was **$156.6 billion**, up **19% year-over-year**. Many companies are moving workloads to the cloud in preparation for AI, as effective AI requires well-organized data accessible for model training and application building. The ability to use AI is a significant driver for cloud migration for those yet to move.  **[AMZN_3395769_10]** 

0563759142eff546e1e08a9b30b085743c297238fa9f62f81c4b4aebeb0d5795

- **Amazon's heavy capital expenditure is expected to increase in 2024, primarily due to investments in generative AI projects and AWS infrastructure, which may pressure free cash flow and profitability**.  **[AMZN_3371617_8]**
- **In key growth areas like grocery and health care, Amazon acknowledges that it's still early days, and success is not yet proven, indicating potential risks in these significant investments**.  **[AMZN_3371617_12]**
- **Geopolitical issues and potential supply chain disruptions, such as those near the Red Sea, could pose challenges to Amazon's operations, potentially affecting shipments to the U.S. and Europe**.  **[AMZN_3371617_10]**

fd645f2ba9c660c93bf2b761c6720602ae0acd57c9bd0e9316de8227f0062524

1. **AWS Margins and CapEx Plans**  
   **Q:** What drives 38% AWS margins? CapEx outlook for 2025?  
   **A:** AWS margins increased due to accelerating top-line demand, cost control efforts, and extending server useful life adding about **200 basis points** of margin year-over-year. CapEx is expected to be **$75 billion** in 2024, likely more in 2025, mainly for AWS investments driven by generative AI. The AI business is a multibillion-dollar operation growing triple-digit percentages year-over-year and growing **3x faster** than AWS did at its stage of evolution.  **[AMZN_3405212_7]** 

2. **Cloud Capacity Constraints and AI Chips**  
   **Q:** Are you capacity constrained? Impact of new chips on growth?  
   **A:** We have more demand than capacity, primarily in chips. Our partnership with NVIDIA, being first to offer H200s in EC2 instances, and our custom silicon **Trainium2**, ramping up in the next few weeks, will address capacity and are expected to drive growth. Customers are excited about Trainium's price performance, leading us to increase production.  **[AMZN_3405212_12]** 

3. **AI Margins in AWS and Future Potential**  
   **Q:** How will AI margins compare to current AWS margins?  
   **A:** The AI space is earlier stage and margins are currently lower, similar to early AWS margins below **15%** in the 2010s. As the market matures, we expect very healthy margins in generative AI. Efficient capacity management will directly impact margins over time.  **[AMZN_3405212_8]** 

4. **International Retail Profitability**  
   **Q:** Outlook for international retail margins and drivers?  
   **A:** International segment operating income was up **$1.4 billion** versus the prior year due to lower cost to serve, increased advertising contribution, improved selection, and faster delivery speeds. Our goal is to achieve North America-like margins over time, with each country at different stages towards profitability.  **[AMZN_3405212_9]** 

5. **Lower ASP Strategy and Consumer Behavior**  
   **Q:** Consumer shift to lower-priced items and strategic response?  
   **A:** Unit volume grew **12%** worldwide. Customers are price-conscious, seeking deals, leading to growth in everyday essentials and lower ASP products. This results in stickier customer relationships, larger baskets, and better ship economics. We're focused on reducing cost to serve to economically supply lower ASP items, unlocking new areas of consumer spend.  **[AMZN_3405212_10]** 

6. **Competition and Amazon's Advantages**  
   **Q:** How does Amazon's fulfillment compare to store distribution?  
   **A:** Competition is healthy, but we have unique advantages: a broader selection, low prices with significant deals, and superior delivery speed. Despite only holding about **1%** of the global retail market share, we believe the shift from physical stores (currently **80%-85%** of the market) to online will offer significant opportunities. Our customer-centric approach and technological innovation are key differentiators.  **[AMZN_3405212_12]** 

7. **Robotics Investments and Progress**  
   **Q:** Status of robotics investments in warehouse network?  
   **A:** We're rolling out significant new robotics capabilities in stowing, picking, packing, and shipping. A facility in Shreveport, Louisiana launched a few weeks ago is showing encouraging results. Automation allows us to ship faster, more cost-effectively, and enhances safety. AI will play a big role, and we've hired from strong robotics AI organizations to accelerate progress.  **[AMZN_3405212_9]** 

8. **Next-gen Alexa and AI Applications**  
   **Q:** Outlook for Alexa leveraging AI agents and data?  
   **A:** With about **0.5 billion** Alexa devices and **couple hundred million** active endpoints, we're rearchitecting Alexa with next-generation foundational models. We aim to lead in AI assistants capable of not just answering questions but also taking actions for customers, enhancing experiences and potentially driving incremental revenues.  **[AMZN_3405212_11]** 

9. **Third-party Unit Mix Decline**  
   **Q:** Why did 3P unit mix decline in Q3?  
   **A:** Third-party units were **60%** in Q3, within the usual **59%-61%** range. The slight decline is due to increased sales of everyday essentials, which tend to be fulfilled first-party. Overall, 3P demand and unit volumes remain strong.  **[AMZN_3405212_11]** 

17fd57a07d54516c849b731d16883e0f895ff862d1ce2d1439bdd5f8cd82029a

- **AWS is facing capacity constraints due to limited supply of AI chips, potentially hindering growth in cloud services.**  **[AMZN_3405212_12]**
- **Shift towards lower-priced items may negatively impact revenue growth, as customers focus on lower average selling price (ASP) products, possibly affecting margins.**  **[AMZN_3405212_10]**
- **Amazon's international segment faces ongoing profitability challenges, with some emerging markets yet to achieve consistent operating profits, potentially weighing on overall financial performance.**  **[AMZN_3405212_9]**

7e35440664d212faa45147a51f5ebbe30dea7ea5dd2c1abebe98de02eb7f6dd2

- **Significant increase in capital expenditures**: Amazon anticipates its overall capital expenditures to "meaningfully increase" year-over-year in 2024, primarily driven by higher infrastructure investments in AWS, including generative AI. This increase could pressure free cash flow and profitability in the near term.  **[AMZN_3381556_7]** ,  **[AMZN_3381556_8]** ,  **[AMZN_3381556_9]** ,  **[AMZN_3381556_3]**
- **Macro-economic challenges and foreign exchange headwinds**: The company expects unfavorable impacts from foreign exchange rates and notes that consumer spending and macro trends appear weaker in Europe relative to the U.S., which could negatively affect international revenue growth.  **[AMZN_3381556_7]**
- **Prioritizing investment over shareholder returns amidst rising debt**: Amazon is prioritizing investing in growth opportunities over returning capital to shareholders (such as dividends or buybacks) while also paying down over $25 billion in debt, raising concerns about its ability to maintain profitability during this period of increased capital expenditures and debt repayment.  **[AMZN_3381556_8]** ,  **[AMZN_3381556_10]**

61a583c1c8303a65e4f0c738b23ca5d98e3eee0479c6e729b59ba9dadc06c511

- **Consumers are trading down to lower-priced products due to macroeconomic pressures**, leading to lower average selling prices (ASPs) and potentially impacting revenue growth in higher-margin discretionary categories like electronics and TVs.  **[AMZN_3395769_12]**
- **Increased investments in projects like Project Kuiper are raising expenses**, and the company is not providing detailed information on these costs, which may pressure margins and profitability.  **[AMZN_3395769_12]** **[AMZN_3395769_8]**
- **Challenges remain in improving North America retail margins back to pre-pandemic levels**, with management indicating it will take "work over a long period of time," highlighting potential difficulties in achieving margin expansion.  **[AMZN_3395769_8]**

2b541460e2742b3305cfb73977e2d469966e67d7b12a1156d38a4821a05b527a

- **AWS growth is accelerating**, driven by sustainable factors such as companies resuming modernization efforts by moving from on-premises to the cloud, increased focus on generative AI, and the fact that **90% of global IT spend is still on-premises**, indicating significant growth potential for AWS.  **[AMZN_3395769_9]**
- **Amazon's pharmacy business is growing rapidly**, with improved customer experience leading to increased customer adoption. The expansion of services like **RxPass to Medicare members** and **same-day delivery of medications** in multiple cities demonstrates strong growth and optimism about the business.  **[AMZN_3395769_9]**
- **Amazon's investments in AI and machine learning are paying off**, with AWS launching more than twice as many machine learning and generative AI features into general availability than all other major cloud providers combined. Services like **Amazon Bedrock**, with **tens of thousands of companies using it**, and **Amazon Q**, which saved the company **$260 million and 4,500 developer years**, are driving significant customer adoption and cost savings.  **[AMZN_3395769_2]**

b022c1d31a1ec3f90f8d01d32583975b634a3fe3d4e5729ad0041ff2b5258ced

1. **AWS CapEx and Generative AI**  
   **Q:** How will AWS CapEx for generative AI impact revenue growth?  
   **A:** Management indicated that significant investments in AWS for generative AI are driving growth.  **[AMZN_3381556_9]**  Companies like Anthropic are training future models on AWS's custom silicon, Trainium.  **[AMZN_3381556_9]**  They have a multibillion-dollar revenue run rate in AI already, expecting both training and inference workloads to be major growth drivers.  **[AMZN_3381556_9]**  This positions AWS to benefit from the increasing demand for generative AI infrastructure.  **[AMZN_3381556_9]** 

2. **Investment Impact on Profitability**  
   **Q:** Will investments in areas like AI affect profitability?  
   **A:** Management believes they can invest heavily in areas like generative AI while continuing to improve profitability.  **[AMZN_3381556_8]**  Despite stepping up CapEx—particularly to support AWS infrastructure and generative AI—they have made significant progress in operating income and free cash flow over the last 18 months.  **[AMZN_3381556_8]**  The majority of increased CapEx will be in AWS, expected to yield strong returns over time.  **[AMZN_3381556_8]** 

3. **Cost to Serve and Capital Return**  
   **Q:** How will cost improvements affect margins and capital return?  
   **A:** They are actively working to reduce cost to serve and improve operating margins, aiming to achieve pre-pandemic levels even without advertising impact.  **[AMZN_3381556_10]**  Regarding capital return, they emphasize prioritizing investments in growth opportunities with meaningful returns, especially in generative AI, and have not committed to dividends or buybacks.  **[AMZN_3381556_10]**  They've also repaid over **$25 billion** of debt accumulated during negative free cash flow periods.  **[AMZN_3381556_10]** 

4. **International Profitability**  
   **Q:** What is the progress towards international profitability?  
   **A:** Operating income for the international segment reached **$902 million** in Q1, up **$2.2 billion** year-over-year.  **[AMZN_3381556_13]**  Established markets like Europe, Japan, and the U.K. are profitable and following the U.S. trajectory.  **[AMZN_3381556_13]**  Emerging markets launched in the last seven years are improving, focusing on customer experience, Prime sign-ups, and cost structure.  **[AMZN_3381556_13]**  Management is optimistic about continued profitability improvements internationally.  **[AMZN_3381556_13]** 

5. **Logistics as a Service**  
   **Q:** What's the opportunity in Amazon's third-party logistics business?  
   **A:** They see significant growth in offering end-to-end supply chain services to sellers.  **[AMZN_3381556_11]**  By leveraging capabilities built for internal needs—like customs clearance, upstream storage, and automatic replenishment—they provide value to sellers while requiring only modest incremental investment.  **[AMZN_3381556_11]**  The business is already reasonably sized and growing significantly without necessitating substantial additional CapEx.  **[AMZN_3381556_11]** 

6. **Grocery and Prime Video Ads**  
   **Q:** How are grocery and Prime Video ads contributing to growth?  
   **A:** Prime Video ads, launched a few months ago, are off to a strong start, with advertisers enthusiastic about the new opportunities.  **[AMZN_3381556_12]**  In grocery, they remain optimistic, with a large non-perishables business growing rapidly.  **[AMZN_3381556_12]**  They've introduced a new Prime grocery delivery benefit for **$9.99** a month, which is off to a great start.  **[AMZN_3381556_12]**  Early results from new Amazon Fresh physical stores are meaningfully better in almost every dimension.  **[AMZN_3381556_12]** 

0352aa60c91688c7fc29a57f8ba0f221c54324e3d9d59532120dc77905005584

- Amazon's AWS cloud division is experiencing **more demand than it can fulfill**, indicating strong growth potential.  **[AMZN_3405212_12]**
- The upcoming release of **Trainium2**, Amazon's custom AI chip, is generating significant customer interest due to its **compelling price-performance**, leading Amazon to increase production.  **[AMZN_3405212_12]**
- Amazon has a **deep partnership with NVIDIA**, being the first to offer H200s in EC2 instances, which strengthens its position in AI and machine learning services.  **[AMZN_3405212_12]**

dc7a35987a750a21e1c8501aecbcc25772c5a5af3d841b3696553ed2cb4c2aab

1. **AWS Revenue Acceleration & CapEx Plans**  
   **Q:** What drove AWS revenue acceleration, and what's the CapEx outlook?  
   **A:** AWS revenue growth accelerated to **13.2% in Q4**.  **[AMZN_3371617_8]**  This was driven by increased migrations and growing interest in generative AI products like Bedrock and Q.  **[AMZN_3371617_8]**  Migrations that had slowed are picking up again, and many deals that were delayed in uncertain environments got completed last quarter.  **[AMZN_3371617_8]**  Although generative AI revenue is currently small relative to AWS's **$100 billion annual revenue run rate**, it's expected to drive **tens of billions of dollars of revenue over the next several years**.  **[AMZN_3371617_8]**  CapEx will increase in 2024, primarily to support AWS region expansions and generative AI projects.  **[AMZN_3371617_8]** 

2. **Cost to Serve Improvements**  
   **Q:** How will Amazon continue reducing cost to serve and improve margins?  
   **A:** Amazon has seen cost to serve decrease but believes there's significant upside remaining.  **[AMZN_3371617_9]**  They will hone regionalization improvements made in 2023 and see opportunities in optimizing inbound networks and inventory placement.  **[AMZN_3371617_9]**  Fixed cost controls have improved as they scale, and reductions in inflationary factors like transportation and fuel are helping lower costs.  **[AMZN_3371617_9]**  They aim to surpass 2018 cost to serve levels.  **[AMZN_3371617_9]** 

3. **Capital Returns and Share Buybacks**  
   **Q:** Will Amazon consider share repurchases or capital return programs?  
   **A:** Amazon is pleased with the improvement in free cash flow and better liquidity at the end of 2023.  **[AMZN_3371617_9]**  They discuss capital structure policies regularly but have nothing to announce currently.  **[AMZN_3371617_9]**  The company believes it has strong investment opportunities ahead and will continue to build liquidity.  **[AMZN_3371617_9]** 

4. **North American Margin Outlook**  
   **Q:** Will North American margins continue to improve?  
   **A:** Amazon expects margin improvements to continue, driven by factors like growing into assets added during the pandemic, regionalization, increased productivity, and advertising revenue growth.  **[AMZN_3371617_11]**  They will focus on lowering cost to serve while enhancing customer experience.  **[AMZN_3371617_11]** 

5. **International Profitability**  
   **Q:** How is Amazon improving international profitability?  
   **A:** International operating income improved by **$1.8 billion year-over-year**.  **[AMZN_3371617_10]**  This is attributed to cost reductions, stronger advertising, attention to investments, and fixed cost controls.  **[AMZN_3371617_10]**  Established countries like those in Europe and Japan behave similarly to North America.  **[AMZN_3371617_10]**  Emerging countries are on a trajectory toward profitability.  **[AMZN_3371617_10]** 

6. **AWS Generative AI Strategy**  
   **Q:** How is Amazon approaching the generative AI market within AWS?  
   **A:** Amazon predicts most companies will operate in at least two layers of the generative AI stack: building models, leveraging existing models, and building applications.  **[AMZN_3371617_13]**  Customers want choice and flexibility, which is why Bedrock is resonating with them.  **[AMZN_3371617_13]**  Amazon's coding companion, Q, can increase developer productivity by **30–40%**, offering features like code writing, debugging, testing, and troubleshooting.  **[AMZN_3371617_13]** 

7. **Prime Video Advertising Potential**  
   **Q:** What are Amazon's expectations for advertising on Prime Video?  
   **A:** Advertisers are excited to access Amazon's Prime customer base.  **[AMZN_3371617_11]**  Amazon is increasing advertising in streaming properties like Fire TV, Prime Video, Freevee, and Twitch.  **[AMZN_3371617_11]**  This will support a healthy business model, allowing continued investment in content and growth.  **[AMZN_3371617_11]**  They plan to maintain lower ad loads than traditional network TV, focusing on being useful to customers.  **[AMZN_3371617_11]** 

8. **Grocery Business Strategy**  
   **Q:** How is Amazon unifying its grocery offerings and lowering costs?  
   **A:** Amazon is making progress in grocery by focusing on three segments: non-perishables (growing healthily), Whole Foods Market (growing at a good clip with improved profitability), and Amazon Fresh.  **[AMZN_3371617_12]**  They are testing a new Fresh format with promising results.  **[AMZN_3371617_12]**  Efforts are underway to make it easier for customers to shop across non-perishables, Whole Foods, and Fresh, including improvements in user experience and logistics.  **[AMZN_3371617_12]** 

9. **Health Care Vision**  
   **Q:** What's Amazon's long-term vision in health care?  
   **A:** Amazon aims to improve the health care experience, which is currently frustrating for customers.  **[AMZN_3371617_12]**  They've integrated pharmacy services and see significant momentum with Amazon Pharmacy.  **[AMZN_3371617_12]**  With the acquisition of One Medical, they offer easier access to primary care through chats, video calls, and physical locations, with same-day or next-day appointments.  **[AMZN_3371617_12]**  For Prime members, they offer One Medical subscriptions at **$9 a month or $99 a year**, which is **50% off** the typical price.  **[AMZN_3371617_12]**  They plan to expand into areas like wellness and diet over time.  **[AMZN_3371617_12]** 

10. **Generative AI in Consumer Business**  
    **Q:** How is Amazon using generative AI in its consumer businesses?  
    **A:** Amazon is building dozens of generative AI applications across all its consumer businesses.  **[AMZN_3371617_13]**  Examples include summarizing customer reviews, predicting apparel fit, and forecasting inventory needs.  **[AMZN_3371617_13]**  They launched Rufus, a generative AI-powered shopping assistant, which helps customers discover products in new ways.  **[AMZN_3371617_13]**  Generative AI is expected to significantly enhance customer experience and engagement across Amazon's platforms.  **[AMZN_3371617_13]** 

ecb1e62be817694e7d25837dada6a9e0e3c6d497130e5707952a12ccb60ebd0a

- **AWS revenue growth accelerated to 13.2% in Q4**, with **expectations of continued acceleration in 2024**, driven by the **resumption of migrations** and **strong interest in AWS's generative AI products** like Bedrock and Q, which are **expected to drive tens of billions of dollars of revenue over the next several years**.  **[AMZN_3371617_8]** **[AMZN_3371617_3]**
- **Amazon's North American margins have improved for 7 consecutive quarters**, and the company expects these positive trends to continue due to **efficiency gains, cost reductions, and advertising revenue growth that outpaced traffic growth rates**.  **[AMZN_3371617_11]**
- **Amazon's International segment improved operating income by $1.8 billion year-over-year**, driven by **cost reductions, stronger advertising**, and disciplined investments; established markets perform similarly to North America, and emerging markets are **on a path to profitability**.  **[AMZN_3371617_10]**

d9c8556f92c44dbce13f429366aca354353a4527e59d05c6132968d0470dd509

- **AWS Growth and Generative AI Momentum:** Amazon Web Services (AWS) revenue increased by **17% year-over-year** to reach **$25 billion**, becoming a **$100 billion annualized revenue run rate business**.  **[AMZN_3381556_7]**  AWS is experiencing strong demand in both generative AI and non-generative AI workloads, with customers making larger commitments.  **[AMZN_3381556_8]** **[AMZN_3381556_9]**  AWS's meaningful edge in security and operational performance positions it well to capitalize on the significant growth opportunity in generative AI.  **[AMZN_3381556_9]**
- **Improving Profitability in International Markets:** The International segment's operating income was **$903 million**, an improvement of **$2.2 billion year-over-year**, with operating margin increasing by **710 basis points** to **2.8%**.  **[AMZN_3381556_7]** **[AMZN_3381556_13]**  Both established and emerging international markets are contributing to this profitability, demonstrating Amazon's global growth potential.  **[AMZN_3381556_13]**
- **Strong Growth in Advertising and Prime Video Ads:** Advertising sales grew by **24% year-over-year**, driven by sponsored products and the early success of **Prime Video ads**.  **[AMZN_3381556_7]** **[AMZN_3381556_12]**  Advertisers are excited about expanding their ability to advertise beyond Twitch, with Prime Video ads offering unique relevancy and measurability  **[AMZN_3381556_12]** , representing a meaningful contributor to ad revenues.

6038a0864e9d05c2b067698c6a5d6fe392f324b27d49ef6134160831cc1baefb

Amazon.com Inc (AMZN)

Financials