Amazon stocks drops despite record revenue, AWS growth disappoints
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Amazon shares dropped 4% in after-hours trading on Thursday, as investors focused on slowing AWS growth and cautious guidance rather than the company's record-breaking $187.8 billion revenue for Q4 2024.
AWS growth meets expectations but fails to excite
The Amazon Web Services (AWS) division, a key driver of profitability, reported $28.8 billion in revenue, up 19% year-over-year and in line with estimates. While the cloud segment maintains a 36.9% operating margin, significantly higher than amazon’s overall 6.6% margin, investors had hoped for stronger growth in a sector critical to Artificial Intelligence (AI) expansion.
Market disappointment over forward guidance
Amazon’s Q1 2025 revenue outlook of $151 billion to $155.5 billion fell short of Wall Street's $158.6 billion projection, dampening sentiment. The company's cautious tone suggests moderating consumer demand and a more measured expansion strategy for the coming quarters.
Capital expenditures nearly double on ai infrastructure
Amazon’s Capital Expenditures (CAPEX) surged to $27.8 billion, nearly double the figure from a year earlier. This spending spree reflects the company’s aggressive push into data centers and ai-focused infrastructure, a long-term bet that is yet to translate into immediate financial returns.
CEO Andy Jassy remains optimistic on ai potential
CEO andy jassy emphasized the long-term benefits of Amazon’s investments, stating that customer adoption of its AI-enabled cloud services will bring substantial revenue opportunities in the coming months.
Market reaction: valuation concerns weigh on stock
While Amazon continues to post strong topline growth, concerns over aws growth plateauing, soaring CAPEX, and lackluster guidance triggered the post-earnings selloff. Despite a 1.13% gain in regular trading, amazon’s pre-market losses signal investor skepticism about near-term profitability. With ai infrastructure spending surging and aws remaining a key battleground, investors will closely watch whether Amazon’s cloud and retail segments can deliver accelerating margins and sustained revenue growth in 2025.
AWS growth meets expectations but fails to excite
The Amazon Web Services (AWS) division, a key driver of profitability, reported $28.8 billion in revenue, up 19% year-over-year and in line with estimates. While the cloud segment maintains a 36.9% operating margin, significantly higher than amazon’s overall 6.6% margin, investors had hoped for stronger growth in a sector critical to Artificial Intelligence (AI) expansion.
Market disappointment over forward guidance
Amazon’s Q1 2025 revenue outlook of $151 billion to $155.5 billion fell short of Wall Street's $158.6 billion projection, dampening sentiment. The company's cautious tone suggests moderating consumer demand and a more measured expansion strategy for the coming quarters.
Capital expenditures nearly double on ai infrastructure
Amazon’s Capital Expenditures (CAPEX) surged to $27.8 billion, nearly double the figure from a year earlier. This spending spree reflects the company’s aggressive push into data centers and ai-focused infrastructure, a long-term bet that is yet to translate into immediate financial returns.
CEO Andy Jassy remains optimistic on ai potential
CEO andy jassy emphasized the long-term benefits of Amazon’s investments, stating that customer adoption of its AI-enabled cloud services will bring substantial revenue opportunities in the coming months.
Market reaction: valuation concerns weigh on stock
While Amazon continues to post strong topline growth, concerns over aws growth plateauing, soaring CAPEX, and lackluster guidance triggered the post-earnings selloff. Despite a 1.13% gain in regular trading, amazon’s pre-market losses signal investor skepticism about near-term profitability. With ai infrastructure spending surging and aws remaining a key battleground, investors will closely watch whether Amazon’s cloud and retail segments can deliver accelerating margins and sustained revenue growth in 2025.