Amazon.com posted sales in last year’s final quarter that topped Wall Street estimates, but investors initially drove shares down due to weakness in the cloud computing unit and a lower-than-expected revenue estimate.
Reuters
Amazon’s shares fell as much as 4% in extended trade after the report, erasing about $90 billion worth of stock market value, and were last down about 2%.
The tech company’s sales estimate for the first quarter failed to meet analysts’ expectations, even if a negative impact of $2 billion from last year’s Leap Day is included. The company said it anticipates between $151 billion and $155 billion, compared with the average estimate of $158 billion.
The company’s cloud unit, Amazon Web Services, reported a 19% rise in revenue to $28.79 billion, falling short of estimates of $28.87 billion, according to data compiled by LSEG. Amazon joins smaller cloud providers Microsoft and Google in reporting weak cloud numbers.
The cloud weakness occurs as investors have grown increasingly impatient with Big Tech’s multibillion-dollar capital spending and are hungry for returns from hefty investments in AI.
“After very strong third-quarter numbers, this quarter the growth rates all missed. That’s what the market doesn’t want to hear,” said Daniel Morgan, senior portfolio manager at Synovus Trust. He said this is particularly true after the emergence of new competitors in artificial intelligence such as China’s DeepSeek.
Like its rivals, Amazon is investing heavily in artificial intelligence software development. At its annual AWS conference in December it showed off new AI software models that it hopes will draw new business and consumer customers. Later this month, it is set to release its long-awaited Alexa generative artificial intelligence voice service after delays over concerns about the quality and speed, Reuters reported earlier this week.
Competitors Microsoft and Google parent Alphabet both posted slowing cloud growth in last year’s fourth quarter, sending shares lower. The companies, along with Meta Platforms, said costs to develop infrastructure for artificial intelligence software contributed to sharply higher anticipated capital expenditures for 2025, a total of around $230 billion between them.
Amazon’s retail business helped offset the cloud weakness, with the company reporting online sales growth of 7% in the quarter to $75.56 billion. That compared with estimates of $74.55 billion.
Amazon forecast operating profit of $14 billion to $18 billion for the first quarter of 2025, missing an average analyst estimate of $18.35 billion.
The company reported revenue of $187.8 billion in the fourth quarter, compared with the average analyst estimate of $187.30 billion, according to data compiled by LSEG.
Advertising sales, a closely watched metric, rose 18% to $17.3 billion. That compares with the average estimate of $17.4 billion.
Net income nearly doubled to $20 billion from $10.6 billion a year earlier. The Seattle retailer reported earnings of $1.86 per share, compared with expectations of $1.49 per share.
