How Amazon raised its profits by 4000 %

Last year’s reorganisations and savings are bearing fruit for Amazon. The e-commerce company raised its sales by 14 % in the fourth quarter, and its profits by an astonishing 4000 %.

Sharply higher profits

Amazon cut costs sharply in 2022 and 2023, laying off 27,000 employees, aborting a number of projects and closing a number of physical shops. Those cuts are now paying off: in the fourth quarter, the company performed better than expected.

Sales rose 14 % to 170 billion dollars (150 billion euros). End-of-year sales, including Black Friday, reached a new record, while demand for Amazon’s cloud services also increased again. The start of the results show was Amazon’s net income though, which went up times forty, from 278 million dollars to 10.6 billion (!) (almost ten billion euros).

AI should improve even more

In the current quarter, Amazon is counting on revenue to grow between 8 % and 13 %. CFO Brian Olsavsky says the company remains cautious about new investments in 2024, but that the efficiency drive of previous years is over. Amazon wants to continue saving, but also invest in new projects.

For instance, generative AI is still relatively small, but Amazon’s AI chatbot called “Q” is already raising a lot of interest. The e-commerce giant also announced Rufus, a generative AI shopping assistant, which Amazon is testing among a subset of users in the United States. AI should become good for “tens of billions of dollars” in sales over the next few years.