As stores reopen and in-person shopping picks back up, the surge in demand for Amazon purchases has finally started to wane — not much, to be clear, but just enough to frustrate investors.
From April through June, Amazon saw $113.1 billion in sales of products and services, growing 27 percent year over year. That’s an enormous amount of money, but investors were hoping for a bit more, around $115 billion, and Amazon’s stock has been slipping since releasing the figures in its Q2 2021 earnings report this afternoon.
But there was one spot investors are happy to see, and it helps to explain the company’s recent executive shuffle. Amazon Web Services did $14.8 billion in net sales, up 37 percent year over year. That substantial growth outpaced Amazon as a whole and AWS’s prior Q2, when it grew by 29 percent. It was the sole business bright spot that Andy Jassy, Amazon’s new CEO, found worthy of mentioning in his remarks accompanying the release, saying “we’ve seen AWS growth reaccelerate.”
Jassy had been in charge of AWS up until July 5th, when he was elevated to CEO to replace Jeff Bezos, who left to go eat Skittles in space. The cloud division has always been a powerhouse for Amazon, accounting for most of the company’s operating income. While its growth had slowed during the pandemic, the division now seems to be, as Jassy said, reaccelerating.
As for the rest of Amazon, the concern from investors over a company that merely made $113.1 billion in a three-month span may stem from two places. For one, last year Amazon was growing way faster — it saw 40 percent growth in net sales this time in 2020, versus 27 percent this year — though one might recall that a certain global pandemic was picking up during those months, encouraging a boom in online shopping. But secondly, the other tech giants have done quite well this quarter, beating investor expectations, making Amazon the odd one out.
Prime Day was also held in June this year, which likely helped juice those numbers. Amazon said 250 million items were purchased, more than any prior Prime Day.
There have been signs that the growth of online shopping as a whole is starting to slow down. Growth is still growth, but it means that Amazon and its investors can’t expect to see gains quite as enormous as the ones that happened in 2020, as much of the world tried to avoid indoor shopping.
Jassy hasn’t offered any indication of how he’ll steer the company differently from Bezos, but today’s numbers help to show why he’s in charge. AWS remains a bright spot, and its leader now has the rest of Amazon to look after.