A look at Amazon’s “most successful season yet"
Amazon had plenty to celebrate after wrapping up a stellar holiday season, but its message to investors struck a far less cheerful note.
Fourth-quarter earnings soared, revenue topped expectations, and profits nearly doubled compared to the same period last year. Yet the company’s cautious forecast for the months ahead cast a shadow over the good news.
Wall Street was counting on Amazon to carry its momentum into the new year. Instead, the tech giant warned that sales in the first quarter would fall between $151 billion and $155.5 billion, well below the $158.5 billion analysts had hoped for. If that happens, it would mark the weakest growth since Amazon went public in 1997.
This cautionary guidance overshadowed what was otherwise a strong fourth quarter. Amazon reported earnings of $1.86 per share, comfortably beating the $1.49 forecast. Revenue rose 10% to $187.79 billion, slightly above expectations of $187.30 billion as shoppers flocked to Amazon during the holidays. CEO Andy Jassy hailed it as Amazon’s “most successful season yet,” crediting the company’s ability to deliver for customers while keeping costs in check.
Profitability saw a major boost, with net income doubling to $20 billion. The gains come after a sweeping cost-cutting campaign that began in 2022 and led to over 27,000 corporate layoffs. Those efforts helped Amazon improve its operating margin to 11.3%, up from 7.8% a year ago.
Amazon Web Services, the company’s cloud business and crucial profit engine posted revenue of $28.8 billion, growing 19% from the previous year. While solid, the growth rate lagged behind rivals Microsoft and Google, whose cloud units grew 31% and 30%, respectively. Nonetheless, AWS remains a critical driver of Amazon’s overall profitability.
Advertising was another highlight, pulling in $17.3 billion, though just shy of expectations. Amazon’s growing influence in the digital ad space now firmly places it behind only Google and Meta.
Meanwhile, investments in artificial intelligence are accelerating. Amazon poured billions into data centres and AI hardware, including its custom-built Trainium chips. Jassy emphasized that the company's new AI models, branded as Nova, are key to its generative AI ambitions.
Still, Wall Street is watching closely. Investors want to see whether these hefty AI investments can deliver meaningful returns. For now, Amazon’s challenge is clear: balancing disciplined spending with bold bets on the future while navigating a tougher economic environment.
