1 May, 2023: On Tuesday, Amazon stated better-than-anticipated earnings, but the stock’s starting pop was wiped out after executives raised concerns about ongoing weakness in cloud growth.

It could be more apparent if the reported earnings are comparable to the Refinitiv analyst taking an average of 21 cents per share.

Sales at AWS increased about 16% in the initial quarter to $21.35 billion, above the $21.22 billion estimated by Wall Street. Still, that celebrates a deceleration from the last quarter, when AWS surged 20%.

Companies have been trimming their cloud spend amid a challenging economic environment in recent months. Finance chief Brian Olsavsky cautioned on the call following the report that clients tightened their belts.

“As expected, customers keep evaluating ways to optimize their cloud spending in answer to these tough economic conditions in the initial quarter,” Olsavsky stated. “We are seeing these optimizations keep going into the second quarter with April earnings increase rates about 500 basis points lower than in Q1,” further stated.

The shares initially jumped 10% after Amazon said revenue increased 9% from $116.4 billion a year earlier, topping states. Even with the revenue beat, Amazon stayed mired in single-digit sales increase, coming off its weakest time for expansion in its quarter-century as a public firm.

The stock sold off in the revenues call and turned negative, decreasing almost 3% below its price.

The second-quarter forecast stated that Amazon anticipates sales to increase by 5% and 10% simultaneously. For the next quarter, Amazon said the earnings will be $127 billion to $133 billion. Analysts had stated sales of $129.8 billion, according to Refinitiv.

“Our advertising business keeps providing robust growth because of our ongoing machine investments that support customers to see relevant information when they get connected with us, which in turn delivers powerful results for brands,” CEO Andy Jassy stated in the revenue statement.

Amazon has shuttered many unproven bets, such as a telehealth workshop and a line of fitness. It’s slowed the recent warehouse expansion and paused the construction of its second headquarters in Virginia, which is dubbed HQ2.

Amazon is laying off 27,000 employees, the most significant job cut in its 29-year history. Earlier this week, some AWS and human resources employees were let go, causing total cuts in advertising and Twitch live streaming.

Amazon is shaving its headcount by nearly 76,000 people to 1.46 million workers as of the end of the initial quarter, reflecting in part the recent layoffs and attrition in its warehouses that occurs after the peak holiday shopping period.