Amazon’s cloud system AWS reports weaker-than-expected income growth

Investors concerned over first-quarter sales outlook

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

By Greg Bensinger, Deborah Mary Sophia

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

Amazon’s shares fell as much as 5% in prolonged trade after the fourth-quarter profits 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 expected the capital expenditure run rate for this year to be approximately the exact same as in 2015’s fourth quarter when the business invested $26.3 billion. Amazon has actually boosted spending in particular to assist develop expert system software application.

The company’s sales price quote for the first quarter failed to satisfy experts ´ expectations, even if a negative impact of $2 billion from last year ´ s Leap Day is included. The business said it anticipates between $151 billion and $155 billion, compared with the average estimate of $158 billion. The cloud system, Amazon Web Services, reported a 19% increase in earnings to $28.79 billion, falling short of price quotes of $28.87 billion, according to data assembled by LSEG. Amazon joins smaller cloud providers Microsoft and Google in reporting weak cloud numbers.

Ceo Andy Jassy said the irregular flow of computer chips had held back some growth in AWS. “We could be growing faster, if not for a few of the constraints on capability, and they are available in the type of chips from our third-party partners coming a little bit slower than in the past,” he informed financiers on a conference call.

The cloud weakness takes place as investors have grown increasingly restless with Big Tech’s multibillion-dollar capital spending and are hungry for returns from significant financial investments in AI.

“After really strong third-quarter numbers, this quarter the development rates all missed. That’s what the market doesn’t desire to hear,” said Daniel Morgan, senior portfolio supervisor at Synovus Trust. He said this is particularly real after the development of new competitors in artificial intelligence such as China’s DeepSeek. Like its competitors, Amazon is investing greatly in synthetic intelligence software application advancement. At its annual AWS conference in December it flaunted new AI software designs that it hopes will draw new service and consumer clients. Later this month, it is set to release its long-awaited Alexa generative synthetic intelligence voice service after hold-ups over issues about the quality and speed, Reuters reported earlier today.

Competitors Microsoft and Google parent Alphabet both published slowing cloud growth in last year ´ s 4th quarter, sending shares lower. The business, together with Meta Platforms, surgiteams.com said expenses to establish facilities for artificial intelligence software contributed to sharply greater awaited capital investment for 2025, an overall of around $230 billion between them.

Amazon’s retail company assisted balance out the cloud weakness, with the company reporting online sales development of 7% in the quarter to $75.56 billion. That compared to price quotes of $74.55 billion.

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

The company reported income of $187.8 billion in the fourth quarter, compared with the typical analyst price quote of $187.30 billion, according to data assembled by LSEG.

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

Earnings nearly doubled to $20 billion from $10.6 billion a year earlier. The Seattle retailer reported earnings 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