Amazon’s Growth Is Slow but Good Enough

For much of its history, Amazon grew amazingly, unbelievably fast. Not so much anymore.

Amazon released on Thursday its results for the first quarter. Revenue increased 9 percent, the same as in the previous quarter.

While slow by historical standards, when sales could pop 40 percent from the previous year, the numbers looked pretty good to analysts who expected even less. Amazon shares, which have had a lousy 18 months, rose more than 10 percent in after-hours trading on Thursday before giving up those gains as reality settled in.

Revenue rose to $127.4 billion, while net income jumped to 31 cents a share against a loss of 38 cents in 2022. Analysts had expected a profit of 21 cents a share and revenue of $124.55 billion.

“From my perspective, I think there’s a fair bit to like about how our teams are delivering for customers and the results we’re starting to see,” Amazon’s chief executive, Andy Jassy, said in a call with analysts.

Best-performing sectors were advertising, which rose 21 percent, and Amazon Web Services, which rose 16 percent. But revenue at the online stores, which for most consumers is the essence of Amazon, fell by about $33 million.

Mr. Jassy spoke at length about how all of Amazon will be invigorated in the next few years by artificial intelligence — like large language models and the generative A.I. that they power.

“Frankly the models were not that compelling before about six, nine months ago,” he said. “They have gotten so much bigger and so much better, much more quickly. It really presents a remarkable opportunity to transform virtually every customer experience that exists, and many that don’t exist.”

Amazon, like other tech companies, did very well early in the pandemic when everyone stayed home but has had some troubles since. After expanding its retail distribution network to handle an influx of new business that did not stick around, management is paring back.

Employment at the company has shrunk 10 percent since its peak in early 2022, or by 150,000 workers. Since November, the company has confirmed 27,000 layoffs in divisions including human resources, retail and cloud computing. But the warehouses and distribution network have dropped the most.

Brian Olsavsky, Amazon’s chief financial officer, did not rule out more layoffs in a call with reporters on Thursday. “We’ll proceed adaptively,” he said.

Amazon’s Big Tech peers reported surprisingly good results this week after a brutal winter of layoffs, weak results and diminished expectations. Facebook’s parent, Meta, snapped a three-quarter losing streak in revenue, sending its shares up 10 percent. Google’s advertising search business did better than expected, while Microsoft’s cloud computing operation helped the company notch impressive results.

For years, even decades, Amazon chose growth over profits. Making money took a back seat to establishing new markets. Sometimes this worked so well it changed the fundamental nature of the company. AWS grew at such a torrid rate that its profits have done much to compensate for Amazon’s anemic returns on the retail side.

On the other hand, many small ventures remained small. When to shut them down is a decision that for years Amazon could put off, but no longer. Rising interest rates and balky consumers forced its hand.

This week, the company shut its Halo line of health and fitness devices. Amazon has major ambitions in health care, but fitness devices are a crowded market and Halo was not breaking through. Amazon also shut down in recent days Book Depository, an online bookseller it bought in 2011 and operated independently from its principal book-selling division.

New horizons beckon.

“Health care is a multitrillion-dollar business that is very segmented and it’s really broken, in the U.S. particularly,” Mr. Jassy said.