Amazon shares ease as results disappoint
By Abigail Townsend
Date: Friday 07 Feb 2025
(Sharecast News) - Shares in Amazon came under pressure on Friday after fourth-quarter numbers from the US tech giant disappointed.
Net sales jumped 10% to $187.8bn, fuelled by a bumper holiday shopping season, while operating income rose to $21.2bn from $13.2bn year-on-year.
Diluted income per share was $1.86, up from $1.00 and comfortably ahead of expectations for $1.49.
Retail sales grew by 7% to $75.56bn, also ahead of forecasts.
However, sales in its cloud division, Amazon Web Services, disappointed. They rose 19% to $28.79bn, narrowly missing forecasts for $28.87bn.
Amazon's estimates for the first quarter also failed to meet analyst expectations. The Seattle-based firm forecast sales of between $151bn and $155bn, and operating profits of between $14bn and $18bn. Wall Street had been hoping for sales closer to $158bn and operating profits of around $18.35bn.
As at 0930 GMT, shares in Amazon were down 4% in pre-market trading.
Chief executive Andy Jassy said: "When we look back on this quarter several years from now, I suspect that we'll most remember is the remarkable innovation delivered across all our businesses, none more so that in AWS."
In common with its peers, Amazon is investing heavily in AI software development.
Speaking on a conference call after the results, Jassy told investors Amazon had spent around $26bn across all divisions in the fourth quarter, which was "reasonably representative" of quarterly spending plans for 2025.
The bulk of that investment is expected to be in AWS, with Jassy noting that he saw "significant signals of demand" for AI services and products.
Dan Coatsworth, investment analyst at AJ Bell, said: "Amazon is splashing the cash on data centres, hardware, chips and networking gear to further lay the foundations to serve what it expects to be a gigantic wave of demand.
"That's a huge outlay to stomach now and then a waiting game before it gets a positive financial return on the investment.
"Investors have got the jitters about the gigantic spending for the jam tomorrow. It doesn't help that the jam today is not as sweet as they'd like: AWS sales growth in the past quarter was a fraction below market expectations, extending a similar trend seen by Microsoft and Alphabet."
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