Amazon shrugs off China's threat to record record start to year

Amazon fulfillment center in Swindon, Wiltshire, 2023. Photo: Ben Birchall/PA Wire

Amazon shrugs off competition from fast-growing Chinese rivals and had its strongest start to a year on record.

The technology giant reported profits of US$10.4bn (£8.3bn) in the first three months of 2024, up from 3 .2 billion US dollars in the first three months of 2024. the same period last year.

This comes despite the growing threat from Chinese online retail giants such as Shein and Temu.

The latest jump in profit comes from a 13% increase in revenue to $143.3 billion in the first quarter, driven by strong retail sales in North America and rapid growth in Amazon Web Services' (AWS) digital infrastructure unit.

Amazon has welcomed growing demand for its artificial intelligence (AI) services, which are controlled by AWS.

Executives now expect the AWS unit as a whole to top $100 billion in sales this year.

Shares briefly jumped more than 6% after the trading update before falling back to about 2%.

The results, released Tuesday evening, come as Amazon executives increasingly focus on competition from Chinese shopping sites.

The theme, owned by China's PDD, has quickly grown to tens of millions of monthly shoppers, lured by its competitive prices and «buy like a billionaire» slogan.

Last month, the Wall Street Journal reported that Temu's app has reached more than 50 million customers in the US, despite launching just over a year ago.

Andy Jassy, ​​Amazon's chief executive, said the company plans to focus on its online shopping division while continuing to «expand selection, provide everyday low prices and speed up delivery.»

Facing new competition in retail, Amazon also is competing with other tech giants to develop artificial intelligence tools amid a boom in interest.

The company on Tuesday unveiled a new artificial intelligence app development product that will allow non-technical users to create their own smartphone apps without any programming experience.

The tech giant has also invested billions of dollars in Anthropic, which is developing an artificial intelligence chatbot that competes with OpenAI's ChatGPT. Through its AWS division, it also hosts many artificial intelligence tools from other companies.

Additionally, Amazon reported that its physical stores division generated revenue of $5.2 billion in the first quarter, up 6.3% from the prior year.

The sales surge comes as Amazon is moving away from «just out» checkout technology at some of its U.S. stores.

Shares of the tech giant have risen 16% this year amid a stock market rally driven by optimism about artificial intelligence technology.

Shares of rival Google, which competes with Amazon's web infrastructure unit, are expected to rise about 18% in 2024, while Meta shares are expected to rise 24%.