Amazon’s cloud unit AWS reports weaker-than-expected revenue growth

Investors worried over first-quarter sales outlook

Amazon’s retail business offsets cloud weakness with 7% online sales growth

By Greg Bensinger, Deborah Mary Sophia

Feb 6 (Reuters) - Amazon.com financiers drove shares down sharply on Thursday due to weak point in the retailer’s cloud computing unit and lower-than-expected projections for first-quarter profits and revenue.

Amazon’s shares fell as much as 5% in extended trade after the fourth-quarter earnings report, eliminating about $90 billion worth of stock market value, and were last down about 4.2%.

Amazon Chief Financial Officer Brian Olsavsky said he anticipated the capital investment run rate for this year to be approximately the like in 2015’s fourth quarter when the business spent $26.3 billion. Amazon has actually enhanced spending in specific to help establish expert system software.

The business’s sales estimate for the first quarter failed to experts ´ expectations, even if a negative effect of $2 billion from last year ´ s Leap Day is included. The business said it expects in between $151 billion and $155 billion, compared with the typical quote of $158 billion. The cloud unit, Amazon Web Services, reported a 19% rise in earnings to $28.79 billion, disappointing estimates of $28.87 billion, according to information compiled by LSEG. Amazon signs up with smaller cloud suppliers Microsoft and Google in reporting weak cloud numbers.

Ceo Andy Jassy said the inconsistent flow of computer system chips had kept back some development in AWS. “We might be growing quicker, if not for some of the constraints on capability, and they are available in the form of chips from our third-party partners coming a little bit slower than in the past,” he told financiers on a teleconference.

The cloud weakness takes place as financiers have grown progressively restless with Big Tech’s multibillion-dollar capital costs and are hungry for returns from large investments in AI.

“After very strong third-quarter numbers, this quarter the development rates all missed out on. That’s what the marketplace doesn’t wish to hear,” said Daniel Morgan, senior portfolio manager at Synovus Trust. He said this is particularly true after the introduction of new rivals in expert system such as China’s DeepSeek. Like its rivals, Amazon is investing heavily in expert system software application development. At its yearly AWS conference in December it revealed off new AI software application designs that it hopes will draw brand-new business and customer customers. Later this month, thatswhathappened.wiki it is set to release its long-awaited Alexa generative expert system voice service after delays over issues about the quality and speed, Reuters reported previously today.

Competitors Microsoft and Google parent Alphabet both posted slowing cloud development in last year ´ s 4th quarter, sending out shares lower. The business, along with Meta Platforms, said costs to develop infrastructure for expert system software contributed to sharply greater awaited capital expenses for 2025, an overall of around $230 billion in between them.

Amazon’s retail organization helped offset the cloud weak point, with the business reporting online sales growth of 7% in the quarter to $75.56 billion. That compared with estimates of $74.55 billion.

Amazon forecast operating earnings of $14 billion to $18 billion for the first quarter of 2025, missing out on a typical expert quote of $18.35 billion.

The company reported profits of $187.8 billion in the 4th quarter, compared with the typical expert price quote of $187.30 billion, annunciogratis.net according to data put together by LSEG.

Advertising sales, a carefully watched metric, rose 18% to $17.3 billion. That compares to the average price quote of $17.4 billion.

Net income nearly doubled to $20 billion from $10.6 billion a year previously. The Seattle retailer reported profits of $1.86 per share, compared to expectations of $1.49 per share.

(Reporting by Deborah Sophia in Bengaluru and Greg Bensinger in San Francisco