Amazon stock forfeits gains after company warns on 'optimizations' from AWS customers

Amazon (AMZN) reported first-quarter earnings on Thursday that beat expectations and initially sent shares surging, but cautious comments regarding a slowdown in its key Amazon Web Services (AWS) cloud unit saw the stock reverse all of these gains in extended trading.

Amazon CFO Brian Olsavsky told investors on the company's earnings call AWS customers are continuing "optimizations" in their spending and guided to a notable slowdown in growth from the segment, spooking investors.

Amazon shares were down about 2% near 8:00 p.m. ET Thursday evening.

"As expected, customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter," Amazon CFO Brian Olsavsky told analysts on the company's earnings call. "We are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points lower than what we saw in Q1."

Revenue in Amazon's AWS unit grew 16% during the first quarter, down from an annual growth rate of 37% seen in the same quarter last year.

Olsavsky sought to cushion the blow of this guidance by telling investors, "We're not trying to optimize for any one quarter or year. We're working to build customer relationships and a business that will outlast all of us."

Amazon stock popped as much as 10% late Thursday as investors digested revenues, profits, margins, and current quarter guidance that all blew past Wall Street's expectations.

Here are the headline numbers from Amazon's report, compared to analysts' estimates compiled by Bloomberg:

Net sales: $127.36 actual versus $124.7 billion estimated

EPS: 31 cents actual versus 20 cents estimated

Amazon Web Services (AWS) net sales: $21.35 billion actual versus $21.03 billion estimated

Operating margin: 3.7% actual versus 2.38% estimated

Q2 net sales guidance: $127 billion - $133 billion actual versus $130.1 billion estimated

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