Amazon made more money than experts predicted. But its forecast for the future was weak. This caused its stock to drop by over 4% in after-hours trading.
In 2024, Amazon’s stock rose 44%. It had already gained 9% this year. But its soft outlook hints at a slowdown in AI. Other tech giants like Microsoft, Alphabet, and Meta also gave weak forecasts.
The AI industry faces new challenges. Demand for AI is high, but data centers are costly. Meanwhile, Chinese startup DeepSeek made a powerful AI model at a lower price. This raised concerns that US tech stocks may be overvalued.
Amazon expects revenue between $151 billion and $155.5 billion. This is lower than the $158.5 billion experts predicted. Currency exchange rates will likely cut revenue by $2.1 billion. Amazon also predicts $14 billion to $18 billion in operating income. Experts had expected $18.2 billion. A stronger US dollar, influenced by Donald Trump’s policies and the Federal Reserve, may hurt overseas sales.
Amazon is spending heavily to grow its data centers. It spent $27.8 billion on expansion last quarter, up 90% from last year. Amazon made $187.8 billion in the fourth quarter, up 10% from last year. This beat predictions of $187.3 billion. Without currency effects, revenue rose 11%.
Amazon’s net income jumped 189% to $20 billion, helped by cost-cutting moves like job cuts. Amazon Web Services (AWS) grew 19% for the third straight quarter.
CEO Andy Jassy praised AWS for its AI progress. AWS launched Trainium2, a powerful AI chip, and Amazon Nova, a new AI model. AWS remains the largest cloud provider. But rivals Microsoft Azure and Google Cloud grew faster, at nearly 30% last quarter.
Amazon’s Online Stores made $75.6 billion, up 8% from last year. Its Advertising Services grew 18% to $17.3 billion. Ad business is now the world’s third largest, after Google and Meta. It is also Amazon’s second-biggest revenue source.
Jassy said, “This was Amazon’s best holiday season ever. We thank our customers, partners, and employees.”