Amazon’s impressive Q4 earnings overshadowed by cautious Q1 guidance

USA – Amazon has reported a strong fourth quarter in 2024, with net sales reaching US $187.8 billion—a 10% increase from the same period in 2023—and profits of US $20 billion, surpassing analysts’ expectations.

However, the company anticipates challenges in the first quarter of 2025, projecting revenues between US $151 billion and $155.5 billion, below analysts’ expectations of US $158 billion.

The company cited factors such as foreign exchange headwinds and soft consumer demand as contributing to this cautious outlook.

In response, Amazon is significantly increasing its investment in artificial intelligence (AI) and cloud computing.

The company plans to allocate approximately US $100 billion in capital expenditures for 2025, primarily focusing on AI infrastructure for its Amazon Web Services (AWS) division.

CEO Andy Jassy emphasized that AI represents the most significant technological shift since the internet, underscoring its critical role in Amazon’s future strategy.

Despite these strategic investments, Amazon acknowledges potential challenges ahead, including capacity constraints in data centers and securing high-performance chips and electricity to meet demand. The company also faces competition from emerging cost-efficient AI service providers.

Overall, while Amazon’s recent performance has been strong, the company is preparing for a potentially softer first quarter in 2025 and is making substantial investments to position itself for long-term growth in the evolving AI and cloud computing landscape.