💨 Amazon's Q4 Shock: Record Revenue But Stock Stumbles 💨

Amazon’s latest earnings report revealed record-breaking revenue and impressive profit gains, but investors were left unimpressed. Despite surpassing Wall Street’s expectations, Amazon’s stock took a hit in after-hours trading. Here’s a breakdown of the key highlights and what they mean for the e-commerce and cloud giant.

Record Revenue, But Stock Still Falls

Amazon posted a staggering $187.79 billion in revenue for the fourth quarter, exceeding analysts’ expectations of $187.30 billion. Earnings per share also outperformed projections, coming in at $1.86 versus the anticipated $1.49.

Despite these strong numbers, Amazon’s stock slipped more than 5% in extended trading. Why? Investors focused on weaker-than-expected guidance for the upcoming quarter rather than the company’s stellar performance in Q4.

Cloud Business Growth in the Spotlight

Amazon Web Services (AWS), the company’s most profitable division, reported revenue of $28.8 billion, a 19% increase year-over-year.

While this figure matched analysts’ estimates, it didn’t offer a major upside surprise. Comparatively, Microsoft’s Azure and Google Cloud saw stronger growth at 31% and 30%, respectively.

AWS continues to be a powerhouse for Amazon, contributing significantly to operating margins. However, its slower growth relative to competitors left investors wanting more.

AI and Big Spending on the Future

Amazon is heavily investing in artificial intelligence (AI) and cloud infrastructure. Capital expenditures nearly doubled from the previous year, hitting $27.8 billion in Q4. The company has been aggressively spending on data centres and Nvidia processors to strengthen its AI capabilities.

Looking ahead, Amazon CFO Brian Olsavsky stated that capital expenditures are expected to reach $100 billion in 2025, up from $83 billion in 2024. CEO Andy Jassy highlighted Amazon’s AI initiatives, including new Nova AI models and Trainium chips, which could drive future growth.

Global Challenges and Weak Guidance

Amazon’s Q1 revenue forecast fell short of expectations, projecting between $151 billion and $155.5 billion, while analysts anticipated $158.5 billion. The company cited a $2.1 billion unfavourable impact from foreign exchange rates as a major factor.

Additionally, Amazon expects operating income to reach $16 billion at the midpoint, falling below analyst estimates of $18.4 billion. This conservative outlook contributed to the stock’s after-hours decline.

Advertising and E-Commerce Still Strong

Amazon’s advertising business continues to thrive, with revenue growing 18% to $17.3 billion. This positions Amazon as a dominant player in the digital ad space, ranking behind only Alphabet and Meta in the U.S.

Meanwhile, core e-commerce revenue showed steady growth:

• Online store sales rose 7% to $75.6 billion.

• Third-party seller services revenue climbed 9% to $47.5 billion.

• Subscription services, including Amazon Prime, increased 10% to $11.5 billion.

Amazon’s Stock Performance

Amazon’s stock gained 40% in 2024, outpacing the Nasdaq’s 29% growth. However, the post-earnings dip signals investor caution amid concerns over slowing growth, heavy capital expenditures, and foreign exchange headwinds.

Final Thoughts

Amazon delivered a strong Q4 performance, with record revenue and rising profits. However, a cautious outlook and slower-than-expected AWS growth led to investor hesitation. As Amazon doubles down on AI and cloud investments, the coming quarters will determine whether these bets pay off in the long run.

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