TLDR:
- Amazon’s Q4 earnings beat expectations with $187.7B revenue and $1.86 EPS, but stock fell 3% on disappointing Q1 guidance of $151-155B (below $158B forecast)
- AWS Q4 revenue reached $28.7B, slightly missing $28.8B expectations, while operating income increased by $3.5B to $10.6B
- Company plans massive $105B capital expenditure in 2025, up from $75B in 2024, primarily for AI and data center investments
- Advertising revenue showed strong growth, up 18% year-over-year to $17.3B
- Foreign exchange rates created a $900M headwind in Q4, with Q1 2025 expected to see $2.1B impact
Amazon reported strong fourth-quarter results for 2024, beating Wall Street expectations despite challenges in its cloud computing division. However, the tech giant’s conservative first-quarter guidance for 2025 sent its stock down more than 3% in pre-market trading on Friday.
The e-commerce and cloud computing leader posted earnings per share of $1.86 on revenue of $187.7 billion, surpassing analyst expectations of $1.50 EPS and $187.3 billion in revenue. This marked a substantial improvement from the same period last year when the company reported EPS of $1.00 and revenue of $169.9 billion.
Amazon Web Services (AWS), the company’s cloud computing arm, generated $28.7 billion in revenue during the fourth quarter, falling slightly short of the expected $28.8 billion. Despite the miss, AWS operating income showed impressive growth, increasing by $3.5 billion to reach $10.6 billion.
The company’s advertising business continued its strong performance, with revenue growing 18% year-over-year to reach $17.3 billion. This growth demonstrates Amazon’s increasing strength in the digital advertising market.
Operating income for the quarter reached $21.2 billion, representing a 61% increase from the previous year and marking the largest operating income quarter in Amazon’s history. The North America segment saw operating margins improve to 8%, while International operations achieved a 3% operating margin.
Foreign exchange rates posed challenges for the company, creating a $900 million headwind in the fourth quarter. Looking ahead to Q1 2025, Amazon expects an even larger impact of approximately $2.1 billion from foreign exchange rates.
The company’s guidance for the first quarter of 2025 fell short of Wall Street expectations. Amazon projects Q1 revenue between $151 billion and $155 billion, below analyst estimates of $158 billion. The company noted that the leap year in 2024 added $1.5 billion to net sales.
In a notable development, Amazon announced plans to significantly increase its capital expenditure to $105 billion in 2025, up from $75 billion in 2024. CEO Andy Jassy indicated that the majority of this investment would be directed toward AI infrastructure and data center expansion.
The company’s Q4 capital investments totaled $26.3 billion, reflecting the anticipated annual rate for 2025. These investments are primarily focused on enhancing AI capabilities within AWS.
AWS faced similar challenges to its cloud competitors, Microsoft and Google, who both missed their cloud sales expectations for the quarter. These companies cited capacity constraints in meeting AI service demand as a factor in their performance.
Amazon has integrated AI offerings from China-based startup DeepSeek into its AI services platform, allowing users to access these capabilities alongside its existing services.
The company reported continued improvement in its logistics operations, noting reduced global cost per unit for the second consecutive year while increasing delivery speed. However, changes in asset useful life calculations are expected to decrease full-year 2025 operating income by approximately $400 million.
Supply chain constraints, including chip shortages and power limitations, continue to moderate AWS growth. However, management expects these constraints to ease in the second half of 2025.
North America revenue grew by 10% year-over-year, while International revenue increased by 9% when excluding foreign exchange impacts. The company’s free cash flow reached $36.2 billion, representing a $700 million increase from the previous year.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
