Amazon Shares Drop As Cloud Growth Sales Forecast Lag

Amazon's cloud system AWS reports weaker-than-expected earnings development


Investors concerned over first-quarter sales outlook


Amazon's retail company offsets cloud weak point with 7% online sales development


By Greg Bensinger, Deborah Mary Sophia


Feb 6 (Reuters) - Amazon.com 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 revenue and profit.


Amazon's shares fell as much as 5% in extended trade after the fourth-quarter earnings report, eliminating about $90 billion worth of stock exchange 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 like last year's 4th quarter when the company spent $26.3 billion. Amazon has actually enhanced costs in specific to assist establish artificial intelligence software application.


The company's sales price quote for the first quarter failed to satisfy analysts ´ expectations, even if a negative effect of $2 billion from last year ´ s Leap Day is consisted of. The company said it expects between $151 billion and $155 billion, compared with the typical price quote of $158 billion. The cloud system, Amazon Web Services, reported a 19% rise in profits to $28.79 billion, disappointing price quotes of $28.87 billion, funsilo.date according to data assembled by LSEG. Amazon signs up with smaller sized cloud providers Microsoft and Google in reporting weak cloud numbers.


Chief Executive Officer Andy Jassy said the inconsistent circulation of computer chips had kept back some development in AWS. "We might be growing quicker, if not for a few of the constraints on capability, and they are available in the kind of chips from our third-party partners coming a little bit slower than before," he informed financiers on a conference call.


The cloud weak point occurs as investors have grown increasingly restless with Big Tech's multibillion-dollar capital spending and are starving for returns from substantial investments in AI.


"After very strong third-quarter numbers, this quarter the growth rates all missed out on. That's what the market doesn't 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 synthetic intelligence such as China's DeepSeek. Like its rivals, Amazon is investing greatly in expert system software application advancement. At its yearly AWS conference in December it displayed brand-new AI software designs that it hopes will draw brand-new business and customer customers. Later this month, 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 this week.


Competitors Microsoft and Google parent Alphabet both posted slowing cloud growth in in 2015 ´ s fourth quarter, sending shares lower. The business, along with Meta Platforms, said costs to develop facilities for expert system software application added to dramatically greater awaited capital investment for 2025, a total of around $230 billion in between them.


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


Amazon forecast operating revenue of $14 billion to $18 billion for the very first quarter of 2025, missing an average analyst estimate of $18.35 billion.


The company reported revenue of $187.8 billion in the fourth quarter, compared to the average expert price quote of $187.30 billion, according to data put together by LSEG.


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


Earnings almost 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; Additional reporting by Noel Randewich in Oakland, California; Editing by Shounak Dasgupta and Matthew Lewis)