The Six Five team discusses Amazon Q1/24 earnings & Q goes GA.
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Transcript:
Daniel Newman: So I’m going to talk about Amazon’s earnings. Amazon came out Q1 2024. This was the next kind of hold your breath moment, hold your nose, go under the water, and what happens because this is what has to happen. The market’s actually setting up extremely well. You got Microsoft doing all, Google doing well, you got Amazon doing well and Apple artificially doing well. And so Amazon though hit its number on the top. Its ecommmerce number was good. It hit its number on the bottom. It delivered this quarter. But most importantly I think was one number that you and I were waiting to see what happened is AWS. There’s a lot of people out there that are given a lot of love on the Google/Microsoft side. Is Microsoft taking share? Is Google taking share?
And here’s what I’m thinking finding out, we’re finding out here, is the answer is Google and Microsoft are getting bigger and taking a bigger share of the cloud pie, but it’s not really at AWS’ expense. This is what’s really interesting. And I looked at some data this week in particular of how this is happening. And AWS grew 17%. And again, this is not just 17%. They grew 17% towards $100 billion. Okay? So they are now at a run rate of $100 billion at a $25 billion quarter this quarter, Pat.
So the market overall is they’re sitting at about 31% of share. This is Synergy data. It’s not Futurum data. I’ll get this data soon enough, but I got to give credit where credit’s due. But while over the last couple of quarters, Microsoft’s gained a couple of points of market and Google’s gained a couple of points of market, AWS has only lost one point of market. Okay, so what does that mean? Well, basically what it means is that the market is being taken from other smaller cloud providers. That’s what’s happening on a global basis.
Patrick Moorhead: It’s funny, I saw data from another firm that …
Daniel Newman: You there?
Patrick Moorhead: Oh my … Yeah, my-
Daniel Newman: I lost you for a second-
Patrick Moorhead: … Wi-Fi was getting wonky.
Daniel Newman: Yeah, you’re back. You’re back. You’re back.
Patrick Moorhead: Kind of odd. I’m-
Daniel Newman: Can you hear me?
Patrick Moorhead: Yeah, I’m on Starlink. Yeah, I can hear you.
Daniel Newman: You were saying something. Jump in.
Patrick Moorhead: No, no, no. What was I saying? I don’t even know what I was saying.
Daniel Newman: You said you saw different data, you saw some different data.
Patrick Moorhead: Oh, sorry. Saw different data on market share showing that I think it was just simple based on revenue, but where it showed AWS going up and Azure going down. But again, I don’t do the bean counting. So I’m interested to see some accurate numbers of what happened.
Daniel Newman: Yeah. So that was a really interesting one to watch, but Amazon’s got a lot going on. It doesn’t get the same kind of credit right now for all the things it’s doing in AI. Bedrock, its ability to handle a distributed set of models, the investments it’s making in Anthropic. I’ll let you talk about Q if you want a little bit here in a moment because I want to save some oxygen for you, but a lot going on in AI and it deserves some definite credit there.
But Pat, there’s a coming grip.
With huge size, huge scale, it’s hitting its numbers. AWS growing more than expected, significantly more. It was a billion above what was expected in revenue. I mean, you realize how crazy it is. Sometimes we laugh off like a billion. Ah, it was just a billion above expectation. I think their AWS number was expected around 24. It shows up around 25. It’s like it just a billion more. That was kind of yesterday when you said something about how much could be bought with 110 billion, what companies could be bought with that. Anyways.
And then Pat, the other star of the show is advertising. I mean quietly Amazon’s become the third-largest advertiser. They’re running it like a $60 billion run right now for their advertising business. And that’s been really, really impressive, robust. And of course they can eat their own proverbial dog food with the technology that they’re using with the everything from AI to shopping.
And I think Amazon’s set to be a real beneficiary in the next era of search. And no one’s really talking about that either. But as you look at search and advertising and e-commerce and buying Amazon’s kind of quietly setting up really well and kind of staying under the radar of any antitrust or any BS because, well, they’re not really search as far as we know search, but in many ways they’re becoming search. So good quarter overall, I mean really, really strong. Pat, I’ll kick that back to you.
Patrick Moorhead: Yeah, I mean listen, Amazon’s quarter was almost flawless, kind of like Google and Microsoft. They didn’t have a great guide, but AWS was up so much, so much profit, in fact, record profit, upping of 37%. And even though you and I have talked about this $100 billion annual run rate, they finally hit it. And by the way, it was the biggest percentage growth since the fourth quarter of 2022 also, which we don’t normally see. Every one of the divisions made money. So North America, International and AWS.
And I’m with you there on the advertising, just $12 billion. And by the way, just as a comparison of scale, that’s 50% bigger than YouTube. And yes, I know Google is more than just YouTube, but it just gives you the amazing scale that AWS is advertising. I mean they have advertising anywhere including the AWS console, which not everybody is happy with. I wanted hit on Q. So very similarly, we’ve seen the giant companies, most of the Mag Seven come out with some sort of agent, Copilot, choose your name, essentially a helper. And there was a lot of discussion about industry punditry that hey, AWS, Amazon, they’re behind. They were the clear leaders in machine learning and that’s just the numbers of the amount of enterprises that use things like SageMaker and their core IaaS services.
But Q, right, finally … Not finally. Q went GA. And what they did is an interesting piece and very similar to what we’ve seen. It crosses multiple different things. First of all, they have a portion of Q that essentially sits on a giant data lake, okay? And I’m sorry, I’m looking for my notes here. And that is called … Hang on a second. That’s called Amazon Q in QuickSight. So think of this as a massive BI tool that sits on your managed data lake. They have Amazon Q for business, which is they’ve hit a couple areas like content creation, knowledge search, summary, and interestingly enough, even supply chain, which I thought was interesting and of course you would expect this from on Amazon to be able to hit that really hard.
So I think it’s good to see them go GA with this. Technically speaking, they were behind the GA of Google agents, sorry, Google agents as well as Azure Copilot. But I do like the service that sits on Bedrock, which is very much a managed service and making it simple. And that’s one of the biggest issues out there from keeping enterprises from signing up to do all this general AI is just so difficult. With things like Bedrock, you don’t even have to target a specific accelerator or a GPU or a CPU. It just picks it for you. So a lot of the stuff, I’m looking forward to what they’re doing.
And final comment is Q Connect, which is essentially the ability to think of the amount of call centers out there. And if you’ve got your own software out there, for instance, you’re not working with a five-nine or something like that, Q Connect is there for customer inquiries, sales process, expedite issue resolution.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
