Amazon’s shares fell sharply on Thursday after the company reported weaker-than-expected growth in its cloud computing division and issued a cautious revenue forecast for the first quarter of 2025. The stock dropped as much as 5% in extended trading, erasing approximately $90 billion in market value, before settling at a 4.2% decline.
Amazon Web Services (AWS), the company’s cloud unit, posted a 19% increase in revenue to 28.79 billion for the fourth quarter, missing analysts’ estimates of 28.87 billion. CEO Andy Jassy attributed the slowdown to supply constraints, particularly delays in receiving computer chips from third-party partners. “We could be growing faster if not for some of the constraints on capacity,” Jassy told investors during a conference call.
The company’s first-quarter sales forecast also disappointed, with Amazon projecting revenue between 151 billion and 155 billion, below the average analyst estimate of 158 billion. This outlook includes a 2 billion negative impact from the absence of Leap Day in 2024. Operating profit for the quarter is expected to range from 14 billion to 18 billion, falling short of the $18.35 billion analysts had anticipated.
Despite the cloud slowdown, Amazon’s retail business showed resilience, with online sales growing 7% to 75.56 billion, surpassing estimates of 74.55 billion. Advertising revenue, another key metric, rose 18% to 17.3 billion, slightly below the expected 17.4 billion.
Amazon’s net income nearly doubled to 20 billion in the fourth quarter, up from 10.6 billion a year earlier. Earnings per share came in at 1.86, well above the 1.49 analysts had predicted.
The company’s capital expenditure for 2025 is expected to remain steady at around $26.3 billion, reflecting continued investments in artificial intelligence (AI) infrastructure. Amazon showcased new AI software models at its annual AWS conference in December and plans to release its generative AI voice service, Alexa, later this month after delays due to quality concerns.
The slowdown in AWS growth mirrors trends seen at competitors Microsoft and Google, both of which reported weaker cloud performance in their recent earnings. The three tech giants, along with Meta, are collectively projected to spend around $230 billion on AI infrastructure in 2025, raising investor concerns about the pace of returns on these hefty investments.
