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Amazon’s AI Bets and Cost-Cutting Measures Pay Off, Boosting Stock by 5%

Shares of Amazon surged over 5% in after-hours trading on Thursday after the company reported stronger-than-expected third-quarter earnings. Amazon announced earnings per share of $1.43, alongside revenue reaching $158.9 billion, surpassing analyst projections of $1.14 per share and $157.2 billion in revenue, according to FactSet.

Key Financial Highlights

  • North American Sales: Amazon’s North American segment recorded a 9% year-over-year sales increase, totalling $95.5 billion.
  • AWS Growth: Amazon Web Services (AWS), the company’s cloud unit, posted $27.5 billion in revenue, marking a 19% rise compared to the same period last year.
  • Stock Movement: Although Amazon’s stock initially fell over 3% on Thursday before earnings were released, it rebounded significantly in after-hours trading. So far, Amazon shares are up almost 24% year-to-date.

Background on Amazon’s Strategy

Amazon’s recent efforts include major cost-cutting moves, guided by CEO Andy Jassy, to streamline operations since 2022. This restructuring has led to over 27,000 layoffs and the closure of initiatives such as Amazon’s telehealth and same-day delivery services. Despite these reductions, Amazon is doubling down on other key areas, like a $52 billion investment in nuclear energy to support data centers in Virginia, Mississippi, and Ohio. The company is also moving forward with **Project Kuiper**, aiming to build a satellite network of 3,236 units to broaden internet access worldwide—a venture projected to involve over $10 billion in launch costs across five years, according to analysts from Wedbush Securities.

Amazon’s Market Reach

July’s Prime Day achieved “record-breaking sales,” while the introduction of Amazon’s AI-powered shopping assistant, **Rufus** was rolled out to U.S. customers last month. Notably, Amazon had slightly missed expectations in the previous quarter and cautioned that intense news cycles could distract customers—a factor cited by CFO Brian Olsavsky during the second-quarter earnings call. Despite these challenges, the company’s annual revenue is expected to remain strong.

Noteworthy Figures

Amazon’s market capitalization has reached $1.96 trillion, making it the fifth-largest company globally, trailing behind Apple, Nvidia, Microsoft, and Google. Meanwhile, Jeff Bezos, who served as Amazon’s CEO until 2021, holds a net worth of $204.1 billion, much of which is tied to Amazon’s stock. Market fluctuations ahead of Amazon’s earnings report momentarily decreased Bezos’ wealth by around $6 billion. Bezos ranks as the second-richest American, after Elon Musk, on the Forbes 400 list.

AI Is Everywhere, But Consumers Are Growing More Skeptical

AI is advancing rapidly, but public enthusiasm is moving in the opposite direction. Recent surveys show that more Americans are becoming concerned about the technology, while growing opposition to data centers is turning AI’s social acceptance into a business and political challenge.

A Pew Research study found that 52% of Americans are now “more concerned than excited” about the growing use of AI in daily life, up from 37% in 2021. A May Economist/YouGov poll also found that more than 70% believe AI is developing too quickly.

The political backlash is becoming harder to ignore. Axios reported that the National Republican Senatorial Committee warned major AI companies that data center projects could hurt Republican candidates in a key Ohio election.

AI’s Growing Reputation Problem

Public concern is also showing up among younger Americans. A CNBC poll found that most respondents aged 18 to 34 did not trust nine leading AI executives to act responsibly on AI.

For many consumers, AI is increasingly associated with chatbots, AI-powered search and features appearing inside everyday products, rather than with major improvements to their lives. Google has transformed Search with AI, while companies are adding AI to products ranging from email to televisions.

At the same time, people are hearing about AI being used by students to cheat, while companies face disputes over copyrighted material used to train models and generate art, music, video and writing.

That combination is creating a difficult perception: consumers are being asked to accept the disruption caused by AI without necessarily seeing enough personal benefit in return.

Data Centers Add To The Backlash

The problem extends beyond software. Tech companies are spending enormous sums building AI data centers, but communities are increasingly pushing back over issues including electricity demand, water use and infrastructure.

According to The Wall Street Journal, companies are responding with additional incentives such as employment commitments and investments in local infrastructure. One Louisiana project even included $50,000 bonuses for teachers.

Meanwhile, some consumers are gravitating toward technology that feels deliberately less connected. Young people are showing renewed interest in dumbphones, point-and-shoot cameras, cassette players and CD players. AI-free classic iPods are also attracting attention, while offline hobbies and in-person activities are gaining popularity.

The Industry Is Starting To Take Notice

Some technology executives believe the backlash is partly a communication problem. Others are increasingly acknowledging that consumers may understand AI perfectly well but simply don’t consider its current benefits worth the trade-offs.

Airbnb CEO Brian Chesky recently said on a podcast that the industry needs to build products that ordinary people genuinely value, rather than focusing primarily on AI itself.

Anthropic CEO Dario Amodei similarly described negative perceptions of AI as a “big problem” and a “crisis of trust” in a post on X. In his view, the strongest response would be for AI companies to actually deliver on their biggest promises, including breakthroughs that could significantly improve people’s lives.

For an industry that has attracted hundreds of billions of dollars on the expectation that AI will transform everyday life, technological progress alone may no longer be enough. The bigger challenge could be convincing people that they are actually better off because of it.

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