The retail giant said Thursday that profit fell 28% to $2.1 billion in the third quarter, reflecting the higher spending, but revenue rose 24%, a second consecutive increase, to $70 billion.
Amazon’s costs for technology and content -- largely salaries related to employees in research and development and infrastructure for AWS data centers -- jumped 28% to $9.2 billion. The company’s total workforce increased 22% to 750,000.
Still, AWS’s growth was the slowest since Amazon began breaking out the unit’s performance.
That was “absolutely” a concern for investors, said Tom Forte, an analyst at DA Davidson & Co. Amazon, which had a lengthy head start in building out a cloud-computing platform, faces steep competition now from well-funded rival offerings like Microsoft Corp.’s Azure and Google’s Cloud Platform.
While many analysts lowered their price target for Amazon shares, most of them saw the stock dip as a buying opportunity.
UBS analysts said they weren’t “surprised with the initial negative stock reaction,” and said “investors with a long-term horizon out to 2020 should view this result as a positive with Amazon clearly making investments against long-term objectives -- a paradigm that has historically yielded a much higher stock price once fully digested by investors.“
This article was provided by Bloomberg News.