On February 6, Amazon reported its Q4 earnings, followed by the weaker earnings forecast for the first quarter. Amazon share prices fell by 5% in the extended trading following the fourth quarter earnings report and lower-than-expected forecast. Losing around $90 billion in stock market value, the shares were last down by about 4.2%. The company’s sales forecast for the first quarter fell short of analysts’ expectations, even after factoring in a $2 billion loss from last year’s Leap Day.
Amazon CFO Brian Olsavsky said he expects this year’s capital spending to match last year’s fourth quarter, when the company spent $26.3 billion, mainly to invest in developing artificial intelligence software.
Amazon Q4 Earnings Report
Amazon Web Services (AWS) saw a 19% increase in revenue, reaching $28.79 billion, but missed estimates of $28.87 billion, according to LSEG data. However, Amazon’s retail business helped balance this, with a 7% rise in online sales, totaling $75.56 billion, surpassing the expected $74.55 billion.
For the first quarter of 2025, Amazon forecast operating profit between $14 billion and $18 billion, falling short of the $18.35 billion estimate. The company reported fourth-quarter revenue of $187.8 billion, slightly above the $187.3 billion forecast. Advertising sales grew 18% to $17.3 billion, just below the estimated $17.4 billion.
Net income nearly doubled to $20 billion from $10.6 billion a year ago. Amazon earned $1.86 per share, exceeding expectations of $1.49.
Amazon Q1 Earnings Forecast
The company’s first-quarter sales forecast fell short of analysts’ expectations, even after factoring in a $2 billion loss from last year’s Leap Day. It expects revenue between $151 billion and $155 billion, while analysts anticipated $158 billion. Like its competitors, Amazon is heavily investing in artificial intelligence.
At its AWS conference in December, Amazon showcased new AI software models to attract more business and consumer customers. This month, it plans to launch its delayed Alexa generative AI voice service after addressing concerns about quality and speed.
Amazon Share Price Drops
Last week, Amazon’s share price performance was positive, with a 1.02% increase, closing at $238.50. Despite Amazon reporting strong fourth-quarter earnings that exceeded analysts’ expectations, its stock price dropped by 5% after the release. This decline was mainly due to the company’s cautious guidance for the first quarter of 2025, which missed market forecasts.
Investors were likely worried about the anticipated slowdown in revenue growth, possibly caused by factors like foreign exchange challenges and the lack of a Leap Year day in the first quarter.
