As stores reopen and in-person shopping resumes, the increase in demand for Amazon purchases has begun to diminish – not much, but enough to irritate investors.
Amazon sold $113.1 billion in items and services from April to June, a 27 percent increase year over year. That’s a lot of money, but investors were looking for a little more, approximately $115 billion, and Amazon’s stock has been dropping since the statistics were released in the company’s Q2 2021 earnings report this afternoon.
However, there is one area where investors are pleased, and that explains the company’s recent executive shuffle. Net sales for Amazon Web Services were $14.8 billion, up 37 percent year over year. This significant growth exceeded both Amazon as a whole and AWS’s previous Q2, when it grew by 29%. In his remarks accompanying the release, Andy Jassy, Amazon’s new CEO, mentioned it as the one business bright spot, stating, “We’ve seen AWS growth reaccelerate.”
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Jassy was the CEO of Amazon Web Services until July 5th, when he was promoted to replace Jeff Bezos, who left to eat Skittles in space. Amazon’s cloud sector has long been a stronghold, providing for the majority of the company’s operating income. While the division’s growth slowed during the epidemic, it currently appears to be reaccelerating, as Jassy stated.
Concerns from investors about the remainder of Amazon, which only made $113.1 billion in a three-month period, could arise from two sources. For one thing, Amazon grew more quicker last year — net sales increased by 40% in 2020 versus 27% this year — but one could recall that a global pandemic was ramping up during those months, promoting a surge in online purchasing. Second, the other internet behemoths have performed admirably this quarter, exceeding investor expectations, leaving Amazon as the odd man out.
This year’s Prime Day was also held in June, which is likely to have boosted those numbers. According to Amazon, 250 million things were purchased on Prime Day, which is more than any previous Prime Day.
There have been indications that the overall expansion of internet purchasing is slowing. Growth is still growth, but Amazon and its investors can’t expect to see gains as large as those saw in 2020, when much of the world attempted to avoid indoor shopping.
Jassy hasn’t said how he’ll run the company differently than Bezos, but the data released today demonstrate why he’s in charge. AWS is still a bright spot, and its CEO now has to worry about the rest of Amazon.