Seattle
AI boosts Amazon: Amazon’s revenue surged by 13% year on year to an all-time high of $143.3bn in the first quarter of 2024. The jump was driven by increasing demand for artificial intelligence (AI), which boosted sales at Amazon Web Services, the firm’s cloud-computing arm, says Sarah Needleman in The Wall Street Journal. Profit more than tripled to $10.4bn.
Sales at Amazon Web Services rose by 17% in the first quarter to $25bn, while operating profit increased by nearly 84%. The US technology giant has lagged behind rivals Microsoft and Google’s parent Alphabet in the race to profit from the trend towards generative AI. But chief financial officer (CFO) Brian Olsavsky said capital expenditure will increase “meaningfully” this year compared with the $48.4bn spent in 2023, which will support cloud computing and AI investments.
Amazon had been considered an “also-ran” when it came to AI, and this is reflected in the company’s valuation, which is lower than Microsoft’s, says Jennifer Saba in Breakingviews. Shares in Microsoft have more than tripled in the past five years, twice Amazon’s performance. Stepping up investment is Amazon’s attempt to “remedy the gap” with peers, so if “investors were concerned Amazon was behind the spending curve, they shouldn’t be now”. Some investors may feel “disappointed” by the lack of a dividend, however, says AJ Bell’s Russ Mould. Amazon’s “strategic plans should lead to a significant boost in cash flow”. Meta and Alphabet both recently declared their first dividends.
Beijing
Elon Musk touts Tesla: Elon Musk (pictured) has come closer to rolling out Tesla’s autonomous driving technology in China. On a weekend visit to Beijing, Musk met Chinese prime minister Li Qiang and agreed a deal with Baidu to use the Chinese internet search firm’s mapping and navigation system to operate its full self-driving (FSD) software, say Edward White and Peter Campbell in the Financial Times.
“This is a watershed moment for Musk as well as Beijing... While the long-term valuation story at Tesla hinges on FSD and autonomous [vehicles], a key missing piece in that puzzle is Tesla making FSD available in China,” Dan Ives from investment firm Wedbush Securities told the FT. FSD costs US drivers $99 a month, and in China Tesla has approximately 1.6 million cars on the road.
Meanwhile, allowing Tesla’s self-driving technology to be used in China is seen as a strategic move by the government.
China is trying to persuade
