Amazon this week revealed its second quarter earnings with figures that have come in below what analysts predicted.

Total revenue increased 10 per cent to A$228.02 billion in the period ended June 30, compared with the analysts’ average estimate of A$229.25 billion.

Its operating expenses also increased 5.2 per cent to A$205.37 billion, less than Wall Street’s projections.

Amazon posted an operating profit of A$22.65 billion though that was above what analysts’ had predicted of A$20.95 billion.

Amazon though has indicated that profits, for now, will not be a top priority as it instead focuses on spending on artificial intelligence.

Its projected operating income for the current quarter will be A$17.72 billion to A$23.11 billion in the period ending in September.

Generative AI, which can create text, video and images based on simple user prompts, is an opportunity that Amazon says represents a “multibillion-dollar revenue run rate business.”

Amazon’s Chief Financial Officer Brian Olsavsky said the company had spent A$46.99 billion on capital expenditures in the first half of the year, including on data centres required to power AWS.

“We see strong demand in generative AI and nongenerative AI workloads,” Olsavsky said pledging to spend even more.

In the third quarter, Amazon expects sales to grow between 8 per cent to 11 per cent to as much as A$244.2 billion.

Amazon’s cloud business continued its strong performance this year with AWS revenue jumping 19 per cent in the second quarter to A$40.52 billion

Amazon’s cloud business growth comes as its main e-commerce business faces enormous pressure from rivals such as Shein and Temu. Revenue from Amazon’s seller services and advertising both fell short of estimates.

“Amazon will have to position its offerings and promotions to take advantage of these trends, such as with the reported plans to launch a Temu-like discount section in time for the holidays this year,” Bloomberg reported an EMarketer Inc. analyst Sky Canaves as having said.

Amazon‘s initiative to insert ads into Prime Video helped drive its advertising revenue up 20 per cent for the second quarter of 2024 as it reported ad sales of A$19.67 billion.