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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.

Amazon Deepens Prime Video Shopping With New X-Ray And Lens Features

Amazon is adding new shopping features to Prime Video, allowing viewers to discover products connected to thousands of titles through its existing X-Ray experience.

The company is also introducing “Shop the Scene,” powered by its Lens visual search technology, alongside updates designed to connect video content more directly with shopping.

From Viewing To Shopping

The new tools build on Shop the Show, launched last year through Amazon’s mobile shopping app. Previously, viewers had to search for “shop the show” to find products related to a program.

Now, X-Ray users can open a Shop tab directly from Fire TV to see products associated with the title. Purchases are completed through the Amazon Shopping app, which can recognize the content being watched and open a synchronized product feed.

The app can also identify what is playing and take viewers directly to a storefront, removing the need for a separate search.

Amazon Targets Shoppable Streaming

Amazon is joining a broader push to combine entertainment and commerce. YouTube offers creator merchandise and shoppable connected-TV ads, while Peacock has tested shoppable programming through Must ShopTV.

Roku has enabled shopping through its remote, while Disney has experimented with shoppable television across Disney+, Hulu and ESPN.

Shop The Scene Uses Visual Search

“Shop the Scene” uses Amazon Lens to identify products or similar items based on what appears on screen, including clothing and home decor.

Exact matches will not always be available because some costumes and other items are custom-made, high-end or unavailable through Amazon sellers. The feature can instead help viewers find similar products or recreate a particular style.

Shop the Scene is available on iOS and Android in the U.S. across more than 600 titles. Meanwhile, Shop the Show is expanding from 1,300 titles to more than 8,000, including Prime Originals, selected licensed content and live sports.

For Amazon, the changes bring shopping closer to the viewing experience, potentially creating another way to generate commerce from Prime Video’s audience.

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