Amazon's Profit Hits New Highs as Cost Cutting Bears Fruit

Amazon announced its third quarter earnings this week, beating analyst expectations across the board and delivering its highest-ever quarterly profit of $15.3 billion. The record profit was driven by a combination of strong top-line growth and the company's continued efforts to cut costs and become more efficient, which enabled it to achieve double-digit operating margins for the first time ever this year.

Since taking over from founder Jeff Bezos in 2021, Amazon CEO Andy Jassy has made cost control one of his priorities and the latest results are a testament to those efforts. The company, still one of the largest employers in the world, laid off 27,000 people since late 2022 and plans to be more measured in its hiring going forward. Moreover, Amazon has worked on further regionalizing its logistics network to reduce delivery times and shipping costs, resulting in higher margins in its core e-commerce business.

Another driver of Amazon's improved operating margin is the fact that its higher-margin businesses, i.e. AWS, digital subscriptions and advertising, are growing faster than the traditionally lower-margin online and offline retail segments.