Amazon has posted stronger than expected profits in the first quarter of the year – but warnings of a slowdown in its cloud services as businesses tighten spending hit initial share gains.

The company reported a nine per cent hike in revenue compared to last year.

But an early uplift in the tech giant’s stocks took a dip after chief financial officer Brian Olsavsky said cloud customers were seeking to cut their bills in the face of economic uncertainty.

Cloud services provide computing power remotely.

The company said Amazon Web Services (AWS) expanded 16% during the first quarter, which beat analyst expectations, but was much slower than the 37% growth rate seen the previous year.

Dennis Dick, an equity trader and market structure analyst at Triple D Trading, said shareholders were likely to sell.

“AWS growth slowing is a signal for investors to take profits,” he said.

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The financial update comes after the firm moved to drive down its own costs by shedding 27,000 jobs.

The company has also scrapped entire services, including its Halo health trackers.

These moves contributed to Amazon’s $3.2bn (£2.6bn) profit in the period to 31 March, compared with a loss of $3.8bn (£3bn), a year earlier.

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Meanwhile, the online retailer reported better-than-expected sales of $127bn (£102bn) in the first three months of the year, and it forecast revenue of up to $133bn (£107bn) in the second quarter.

But this did little to impress investors.

David Klink, an analyst at Huntington National Bank, which owns $129m (£103m) in Amazon stock , said the company’s cloud slowdown was “tremendous.”

“You’re not seeing (that) at either Microsoft or Google,” he said.

Earlier this week, it emerged that Amazon could be forced to recognise a trade union in the UK for the first time.

The GMB union said almost 700 Amazon workers in Coventry are now members.

It said this is more than half of the workers at the site – the usual threshold for mandatory union recognition in a workplace.

It comes after two weeks of strike action by workers at the fulfilment centre.

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