Amazon Squeezes Out More Profit as Sales Growth Slows

The company is also focused more on its advertising business. Amazon’s website has had advertising such as Sponsored Products for years, but ads have recently become the company’s fastest growing business. In September, it became the third-largest digital advertising service in the United States, behind just Facebook and Google, according to estimates from eMarketer. Ads provided a bright spot in the earnings, providing about $2.5 billion in revenue in their third quarter of triple-digit growth.

Those lucrative markets let Amazon plow cash into new businesses that require intense physical investments and engineering talent, like expanding fast grocery delivery or building out its Alexa ecosystem. “Now the investment is not a cycle — it’s just a way of life,” said Brian Nowak, who researches Amazon at Morgan Stanley.

The company has been spending heavily in its international operations, in particular India, looking for its next enormous consumer market. International sales were up just 15 percent over the previous year, to $15.5 billion. Amazon’s international sales are not profitable, though the margins are improving.

The company is also building out same-day delivery, which drives sales but is expensive to offer, and offering new video content. And it has expanded into new markets, like pharmacies with its $1 billion PillPak acquisition this summer, and groceries with its Whole Foods acquisition. Amazon now offers Prime members free two-hour delivery from Whole Foods in more than 60 cities, reaching more than 17 percent of the American population, according to Morgan Stanley estimates.

Early this month, Amazon announced it was raising the minimum wage for its warehouse and customer service workers to $15 an hour. The move, which Amazon said could affect more than 250,000 Amazon employees and more than 100,000 seasonal workers, came as the company started to look to attract workers for its holiday peak.

As part of the wage increase, Amazon ended the bonus and stock grants it had been giving workers, which analysts estimated would offset some of the costs, as would increased efficiencies using robotics. Mr. Olsavsky declined to provide details of the costs associated with the new wage.

The results are from a quarter in which Amazon briefly topped a trillion-dollar valuation, though it has fallen below that level since.

“One of Amazon’s weapons against competitors is the confidence of Wall Street,” Mr. Smith said, “to be able to show that when we start a new business in a new category, we can send the value of legacy businesses in those industries plummeting.”