Amazon reported better-than-expected earnings and revenue for the fourth quarter of 2024, with earnings per share at one dollar and eighty-six cents, surpassing the forecast of one dollar and forty-nine cents. Revenue reached one hundred eighty-seven billion dollars, slightly exceeding expectations of one hundred eighty-seven point three billion. However, the company provided disappointing guidance for the current quarter, projecting sales between one hundred fifty-one billion and one hundred fifty-five point five billion dollars, falling short of analyst expectations of one hundred fifty-eight point five billion. Amazon’s net income nearly doubled to twenty billion dollars, attributed to cost-cutting measures and strength in its cloud business. The company’s capital expenditures totaled twenty-seven point eight billion dollars during the quarter, as it invests heavily in data centers and artificial intelligence technologies. Advertising revenue also saw an eighteen percent increase, reaching seventeen point three billion dollars. As of Thursday, Amazon shares were up nine percent for the year.
Amazon Web Services, or AWS, announced a quarterly revenue of twenty-eight point eight billion dollars, marking a nineteen percent increase over the same period last year. While this figure closely aligned with analyst expectations, it still fell short of some estimates. AWS is now on track for an annualized revenue run rate of one hundred fifteen billion dollars, according to Amazon’s CEO Andy Jassy. However, the company’s growth lags behind its major competitors, which experienced growth rates just above thirty percent. AWS continues to face challenges related to data-center construction and chip supply issues, contributing to its slower growth. Additionally, Amazon’s capital expenditures reached twenty-six point three billion dollars during the fourth quarter, primarily to support AWS’s infrastructure needs.
Why do we care?
While AWS remains a dominant cloud provider, its 19% growth rate is well below competitors growing above 30%. This suggests that the hyperscaler cloud market is maturing, and AWS may be losing ground in AI workloads or facing tougher competition from Microsoft and Google. IT service firms should track where workloads are shifting—especially as multi-cloud and hybrid strategies become more prevalent.
There’s also reason to be skeptical of AI and Data Centers – that may not be needed with the driving down of cost of the models.
