Amazon Reports Strong Q4 Earnings, but Cautious Guidance Sends Stock Lower

Amazon has reported impressive fourth-quarter earnings for 2024, exceeding analysts’ expectations.

The tech giant posted earnings per share (EPS) of $1.86, surpassing the anticipated $1.49. Revenue for the quarter reached $187.8 billion, marking a 10% increase from the same period last year and slightly outperforming expectations of $187.3 billion.

Despite the strong earnings, Amazon’s stock dropped in after-hours trading, as the company issued cautious guidance for the first quarter of 2025.

Amazon projected revenue to fall between $151 billion and $155.5 billion, below the anticipated $158.6 billion. The company attributed the softer outlook to an “unusually large, unfavorable impact” from foreign exchange rates.

While the overall performance for the quarter was strong, Amazon’s cloud division, Amazon Web Services (AWS), saw slower growth compared to previous periods. AWS recorded a 19% year-over-year increase in sales, reaching $28.79 billion.

Although the growth remains robust, it slightly missed the projected $28.84 billion, raising concerns about the competitive pressures facing the cloud market.

Notably, competitors Microsoft and Google have also faced challenges in their respective cloud segments.

Amazon’s positive earnings report was driven in part by its retail business, which continues to see strong demand, while the company continues to expand its logistical capabilities and services across the globe.

However, it is the first-quarter outlook that has left some investors uneasy, with many choosing to react cautiously to the news.

The weaker-than-expected revenue guidance for the upcoming quarter is particularly notable as it marks a shift in Amazon’s usually optimistic projections.

As Amazon heads into 2025, the company remains a key player in both the retail and cloud computing industries, though challenges in its AWS division and the foreign exchange impact on its global operations are expected to weigh on its performance in the short term.

With a vast global customer base and continuing innovation, Amazon’s long-term prospects remain strong, but investors will be watching closely for signs of how it plans to navigate these challenges.

For now, Amazon’s earnings report signals resilience in a challenging economic landscape, but the uncertainty surrounding its future outlook has tempered what could have been a triumphant quarter for the e-commerce leader.

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