Amazon’s fourth-quarter earnings exceeded expectations, but the company’s weak guidance has raised concerns about slowing artificial intelligence (AI) growth. The company cited high data center costs and foreign exchange issues as key challenges for the future. Despite reporting strong results, Amazon’s stock fell over 4% after the earnings report.
Amazon projected revenue between $151.0 billion (€145.2 billion) and $155.5 billion (€149.5 billion), missing analysts’ expectations of $158.5 billion (€152.4 billion). The company blamed a $2.1 billion (€2.0 billion) negative impact from currency exchange rates. Operating income is expected to range between $14 billion (€13.5 billion) and $18 billion (€17.3 billion), falling short of the $18.2 billion (€17.5 billion) forecast.
A strong dollar, driven by global economic factors, likely hurt Amazon’s international sales. At the same time, the company’s capital expenditures rose nearly 90% year-over-year, reaching $27.8 billion (€26.72 billion), largely due to continued investments in data centers.
Amazon’s revenue for the quarter totaled $187.8 billion (€180.53 billion), up 10% from the previous year. This exceeded estimates of $187.3 billion (€180.05 billion). Excluding currency effects, revenue grew 11% year-over-year. The company’s net income surged by 189% to $20 billion (€19.23 billion), benefiting from cost-cutting measures and staff reductions.
Amazon Web Services (AWS), a key business unit, grew at a steady 19% for the third consecutive quarter. However, AWS faces strong competition from Microsoft Azure and Google Cloud, both of which grew at around 30%.
Amazon’s CEO, Andy Jassy, highlighted AWS as a top priority for the company. He mentioned advancements like the Trainium2 AI chip and Amazon Nova’s foundation models. While AWS remains the largest cloud service provider globally, it faces stiff competition from rivals investing heavily in their cloud services.
Amazon’s other major business units, including Online Stores and Advertising Services, saw steady growth. Online Stores grew 8% year-over-year, reaching $75.6 billion (€72.67 billion), while Advertising Services grew 18%, reaching $17.3 billion (€16.63 billion). The digital advertising unit is now the third-largest globally, following Alphabet and Meta.
Amazon’s strong earnings report showed solid growth, but concerns about rising costs and weaker-than-expected future guidance overshadowed the positive results. As AI demand increases, Amazon and its competitors face challenges in managing infrastructure costs. The company’s shift towards data center investments and a continued focus on AWS may help sustain its growth amid increasing competition.
