Amazon (AMZN) delivered its fourth-quarter results after Thursday’s market close, exceeding expectations on both revenue and earnings. However, the company’s first-quarter guidance fell short of Wall Street projections, sending Amazon stock down over 3% in Friday’s pre-market trading.
Amazon projects Q1 revenue between $151 billion and $155 billion, significantly below the $158 billion analysts had forecast. The company attributed the weaker outlook to “an unusually large, unfavorable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates.” Amazon also noted that the leap year in 2024 added $1.5 billion to net sales.
AWS revenue for Q4 reached $28.7 billion, slightly missing the $28.8 billion expected.
During the earnings call, Amazon CEO Andy Jassy revealed that the company plans to invest approximately $105 billion in capital in 2025, a substantial increase from the $75 billion spent in 2024. The majority of this investment will be directed towards AI and data center infrastructure.
These results follow similar reports from cloud competitors Microsoft (MSFT) and Google (GOOG, GOOGL), both of which fell short of cloud sales expectations in the quarter. Microsoft reported revenue of $40 billion (vs. $41.1 billion expected), and Google posted sales of $11.9 billion (vs. $12.1 billion expected). Both companies cited limited capacity to meet the surging demand for AI services as a key factor in their cloud revenue misses.
CWEB Analysts’ Perspective
CWEB analysts have offered a balanced take on Amazon’s earnings report and its broader implications.
“Amazon’s Q4 results underscore the strength of its diversified business model, particularly in e-commerce and advertising,” said one CWEB analyst. “However, the weaker Q1 guidance and the intensifying competition in AI are valid concerns that investors cannot ignore.”
Another CWEB analyst added, “The rise of DeepSeek and other AI startups highlights the rapidly evolving nature of the tech landscape. While Amazon’s investments in AI and cloud infrastructure are strategic, the company will need to demonstrate that it can stay ahead of the curve in an increasingly competitive market.”
Market Reaction and Outlook
Following the earnings release, Amazon’s stock price dropped more than 3% in pre-market trading, reflecting investor unease over the company’s Q1 guidance and rising capex. As of Friday morning, shares were trading at $233.60, down 2.19% from the previous close.
Despite the near-term challenges, many analysts remain optimistic about Amazon’s long-term prospects. They cite the company’s strong market position, diversified revenue streams, and strategic investments in AI and cloud computing. However, the company must navigate a complex macroeconomic environment and prove that its investments can deliver sustainable growth.
As the tech giant continues to evolve, CWEB analysts advise investors to approach Amazon’s stock optimistically and monitor its performance closely in the coming quarters.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.
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