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

Investors worried over first-quarter sales outlook

Amazon’s retail company offsets cloud weak point with 7% online sales growth

By Greg Bensinger, Deborah Mary Sophia

Feb 6 (Reuters) - Amazon.com investors drove shares down dramatically on Thursday due to weakness in the retailer’s cloud computing unit and lower-than-expected projections for first-quarter earnings and revenue.

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

Amazon Chief Financial Officer Brian Olsavsky said he anticipated the capital expense run rate for this year to be roughly the like last year’s 4th quarter when the company spent $26.3 billion. Amazon has actually increased spending in specific to assist develop expert system software application.

The business’s sales price quote for the first quarter failed to meet experts ´ expectations, even if an unfavorable impact of $2 billion from last year ´ s Leap Day is consisted of. The company 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 profits to $28.79 billion, falling brief of quotes of $28.87 billion, according to data compiled by LSEG. Amazon joins smaller sized cloud service providers Microsoft and Google in reporting weak cloud numbers.

Ceo Andy Jassy said the of computer chips had actually held back some development in AWS. “We might be growing faster, if not for some of the constraints on capability, and they are available in the type of chips from our third-party partners coming a bit slower than before,” he informed investors on a teleconference.

The cloud weakness occurs as financiers have actually grown significantly restless with Big Tech’s multibillion-dollar capital costs and are hungry for returns from hefty financial investments in AI.

“After extremely strong third-quarter numbers, this quarter the growth rates all missed. That’s what the marketplace does not want to hear,” said Daniel Morgan, senior portfolio supervisor at Synovus Trust. He said this is especially true after the emergence of new rivals in expert system such as China’s DeepSeek. Like its rivals, Amazon is investing greatly in artificial intelligence software advancement. At its annual AWS conference in December it flaunted new AI software models that it hopes will draw new company and customer clients. Later this month, it is set to launch its long-awaited Alexa generative synthetic intelligence voice service after delays over issues about the quality and setiathome.berkeley.edu speed, Reuters reported earlier this week.

Competitors Microsoft and Google parent Alphabet both published slowing cloud development in last year ´ s fourth quarter, sending out shares lower. The business, in addition to Meta Platforms, said expenses to establish facilities for expert system software contributed to sharply greater awaited capital expenditures for 2025, an overall of around $230 billion in between them.

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

Amazon projection operating earnings of $14 billion to $18 billion for the very first quarter of 2025, missing an average expert quote of $18.35 billion.

The business reported income of $187.8 billion in the fourth quarter, compared to the typical analyst price quote of $187.30 billion, according to information put together by LSEG.

Advertising sales, a closely viewed metric, increased 18% to $17.3 billion. That compares to the typical estimate of $17.4 billion.

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

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