By Deborah Mary Sophia

Feb 5 (Reuters) - The pressure is on Amazon.com to provide on lofty expectations for cloud computing in its fourth-quarter results on Thursday, after Microsoft and Google’s dull reports jolted investor faith in Big Tech’s billion-dollar investments in AI.

Shares of major tech companies surged in the previous two years on the belief that huge datacenter requires for artificial-intelligence innovations would power financial investment for years.

But that was before Chinese startup DeepSeek said it had attained AI advancements at a portion of the cost, precipitating a selloff in technology stocks that some say was past due.

Still, Amazon may be much better positioned than competitors to capitalize on cheaper AI, experts say, due to its enormous cloud business and lower direct exposure to pricey large-language models that power apps like ChatGPT.

Amazon Web Services, the world’s biggest cloud services company, wiki.whenparked.com is anticipated to post its strongest income increase in 8 quarters at 19.3%, according to data put together by LSEG.

But Microsoft and Meta were both forced to protect their AI costs plans last week, and shares of Google-parent Alphabet dropped 8% on Wednesday after it said it would be investing more on capex than analysts anticipated.

“Microsoft and Google outcomes have actually put a lot more of a microscopic lense on Amazon’s cloud development,” said Dave Wagner, portfolio manager at Aptus Capital Advisors, which holds shares in all 3 technology business.

“But if Amazon can squash it on their cloud numbers, the marketplace’s going to definitely love that report.”

The company was the first big cloud service provider to embrace DeepSeek’s AI designs last month and has said its capital costs, setiathome.berkeley.edu mainly on AI, would be more than the $75 billion it estimated for 2024.

Slowing development at Microsoft Azure and Google Cloud, the second- and third-biggest cloud gamers, has actually triggered some caution from experts about AWS’ efficiency.

“Microsoft said it was capability constrained, Google said it was capacity constrained. More than likely, Amazon is going to say it might have been capability constrained too which’s why its growth rate isn’t rather approximately what the market might have expected,” said Bob O’Donnell, chief expert at TECHnalysis Research.

Some analysts see the weakness at rivals as an indication that Amazon might have caught up in the AI race through efforts consisting of doubling its investment in Anthropic and using a large choice of AI models on its cloud platform.

“We actually believe that AWS is regaining share. It had actually been growing a lot slower than Microsoft Azure and Google Cloud for a duration of time, but we think that as Amazon has caught up on its AI offering, it might have less of a deceleration than Azure and Google Cloud,” D.A. Davidson analyst Gil Luria said.

The business has actually maintained a greater appraisal than a few of its competitors, with a present forward price-to-earnings ratio of almost 39. Microsoft’s forward P/E is 29 and Alphabet’s 22.4, according to LSEG data.

RETAIL STRENGTH

The e-commerce giant’s results are likewise most likely to gain from a healthy vacation shopping season, after such as Target and a slew of clothing companies issued rosy forecasts over the previous month.

Amazon’s North American sales for the fourth quarter are forecasted to rise 9% year-on-year. After a downturn in online sales development previously this year, experts state Amazon is primed for a rebound in the retail service, which has influenced its post-earnings share motions over the previous two quarters.

Data from Adobe Analytics revealed U.S. buyers spent lavishly online in between November and December 2024, spending more than $240 billion, drawn by deep discount rates on everything from TVs to toys.

The vacation spending development rate of 8.7% almost doubled from the 4.9% recorded in 2023, the data showed.

Amazon has actually also tried to enhance delivery times and broadened product merchandise, including its focus on grocery, pharmacy and fashion - relocations analysts say will assist propel growth.

“Most indications are that it was a good quarter. There was an excellent holiday season for the consumer and so there’s lots of reason to believe Amazon will have done well because side of business,” Luria said.

(Reporting by Deborah Sophia in Bengaluru