Amazon Reports Strong Q4 Earnings but Faces Revenue Forecast Concerns
Amazon reported strong fourth-quarter earnings for 2024, with revenue rising 10% year-over-year to $187.8 billion, driven by robust holiday sales and growth in its cloud computing division. However, the company’s stock dipped in after-hours trading due to a disappointing revenue forecast for the first quarter of 2025. Amazon expects revenue for the current quarter to be between $151 billion and $155.5 billion, below analysts’ expectations of $158.5 billion, citing unfavorable foreign exchange impacts and the absence of an extra day in February due to Leap Year.
The company’s net income nearly doubled to $20 billion, or $1.86 per share, surpassing Wall Street estimates of $1.49 per share. Amazon Web Services (AWS), its cloud computing unit, saw a 19% increase in revenue, though it slightly missed analyst expectations. Meanwhile, online retail sales grew 7% to $75.5 billion, bolstered by holiday promotions and record online shopping activity.
Amazon has been heavily investing in artificial intelligence (AI) and cloud infrastructure, with capital expenditures reaching $27.8 billion in the fourth quarter, up significantly from $14.6 billion a year ago. CEO Andy Jassy emphasized the company’s focus on AI, stating that nearly every application will be reimagined with AI integration. Amazon also launched its own AI models and chips, positioning itself as a key player in the competitive AI landscape.
Despite the strong performance, Amazon’s guidance for slower growth in the first quarter has raised concerns among investors. The company attributed the weaker outlook to foreign exchange headwinds and ongoing economic challenges. Advertising revenue, however, continued to grow, rising 18% to $17.3 billion, reflecting Amazon’s increasing dominance in the digital ad space.
The retail giant remains a major beneficiary of holiday spending, with its promotions and discounts driving significant sales during Black Friday and Cyber Monday. However, the company faces headwinds from global economic conditions and increased competition in both retail and cloud computing.
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