In the first quarter ended March 31, net sales at Amazon rose 28.2%, to $29.1 billion, and net income was $513 million, compared to a net loss of $57 million in the same period in 2015. This was Amazon's most profitable quarter ever, and the results far surpassed analysts' expectations. As a result, in after-hours trading, Amazon stock jumped about $75 a share, or 12%, to $675. As Quartz pointed out, the gain increased Amazon's market value by $35 billion in less than 15 minutes.
The gain was largely attributable to growth in Amazon Web Services, the cloud computing division whose sales rose 64% to $2.57 billion and whose earnings accounted for two-thirds of Amazon's profits in the quarter. As the Wall Street Journal observed: "In other words, AWS is supporting Amazon's sprawling, 20-year-old business that spends billions of dollars in an effort to upend traditional brick-and-mortar retail by providing customers nearly everything imaginable in as quickly as one hour."
The New York Times had a similar take, observing that "cloud computing is also much more profitable than Amazon's North American retail business, which runs on thinner margins, and its international retail business, which runs at a loss."
And while noting that "the numbers are great for Amazon," Forrester analyst Sucharita Mulpuru told USA Today: "Overall the company still has economics that aren't as strong as other public retailers and are much worse than other established technology companies. That will be their challenge to overcome in the years forward."
The company predicted that in the second quarter net sales will be between $28 billion and $30.5 billion, up 21%-32% compared to the second quarter last year.