Amazon Shares Drop on Weak Cloud Growth and Disappointing Forecast REWRITING TEXT:

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Amazon.com shares declined by as much as 5% in extended trading on Thursday after the company reported weaker-than-expected cloud computing growth and a lower sales forecast for the first quarter of 2025. The decline erased about $90 billion in market value before stabilizing at a 4.2% drop.

Amazon Chief Financial Officer Brian Olsavsky indicated that capital expenditure for 2025 would remain consistent with last year’s fourth-quarter spending of $26.3 billion, driven primarily by investments in artificial intelligence (AI) software development.

The company forecast revenue for the first quarter in the range of $151 billion to $155 billion, falling short of analysts’ average estimate of $158 billion. This gap persists even after adjusting for a $2 billion negative impact from the absence of a Leap Day.

Amazon Web Services (AWS) posted a 19% revenue increase to $28.79 billion, narrowly missing analysts’ expectations of $28.87 billion. CEO Andy Jassy attributed the slower AWS growth to inconsistent chip supplies from third-party partners, which constrained capacity.

Investor impatience with Big Tech’s extensive capital spending on AI has grown. Daniel Morgan, senior portfolio manager at Synovus Trust, noted that slowing growth across Amazon’s cloud and retail segments is concerning, especially as competitors such as China’s DeepSeek gain ground in the AI space.

Amazon’s AI investments were showcased at its annual AWS conference in December, where the company introduced new AI models. Its Alexa generative AI voice service is also slated for release later this month after being delayed due to quality concerns.

The company’s retail business provided a cushion, with online sales growing 7% to $75.56 billion, exceeding estimates of $74.55 billion. Advertising sales rose 18% to $17.3 billion, just shy of the expected $17.4 billion.

Amazon forecast an operating profit of $14 billion to $18 billion for the first quarter, missing the average estimate of $18.35 billion. Despite the challenges, Amazon’s fourth-quarter revenue of $187.8 billion slightly surpassed expectations of $187.30 billion. The company also nearly doubled its net income to $20 billion, reporting earnings of $1.86 per share compared to estimates of $1.49 per share.

France, UAE Agree to Build $30-$50 Billion AI Data Centre

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France and the United Arab Emirates (UAE) reached a framework agreement on Thursday to establish a 1-gigawatt artificial intelligence (AI) data centre, representing an investment of between $30 billion and $50 billion, according to the French presidency.

The deal was finalized during a meeting between French President Emmanuel Macron and UAE President Sheikh Mohamed bin Zayed al-Nahyan. The two leaders met ahead of an AI summit scheduled for February 10-11 in Paris, which will bring together representatives from about 100 countries to explore AI’s potential and discuss strategic initiatives.

The summit aims to bolster France and Europe’s position in AI, as they seek to compete with the U.S. and China, both leaders in the development of energy-intensive AI technologies.

In a joint statement, Macron and Sheikh Mohamed expressed a shared commitment to forming a strategic partnership in AI. The partnership will encompass investments in both nations’ AI ecosystems, the acquisition of advanced chips, development of data centres, talent cultivation, and the creation of virtual data embassies to support sovereign AI and cloud infrastructures in France and the UAE.

The first announcements on investments under this partnership will be made later this year at the “Choose France” summit. Meanwhile, the French government has identified 35 potential locations for AI data centres across the country.

Take-Two Projects Weak Q4 Bookings, Confirms Fall Launch for “GTA VI”

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Take-Two Interactive Software (TTWO.O) projected lower-than-expected fourth-quarter bookings on Thursday, attributing the decline to reduced in-game spending on mobile titles amid ongoing economic uncertainties and high inflation. The company expects bookings to fall between $1.48 billion and $1.58 billion, slightly under analysts’ average estimate of $1.54 billion, according to LSEG data.

The broader videogame industry has faced headwinds over the past two years, including layoffs, studio closures, and canceled projects, fueled by weak sales and higher borrowing costs. Take-Two’s mobile games like “Empires & Puzzles” performed below company expectations, reflecting a trend of consumers cutting back on mobile game spending.

Despite the short-term challenges, Take-Two’s stock rose over 6% in extended trading after the company confirmed that the highly anticipated “Grand Theft Auto VI” remains on track for a fall 2025 launch. The long-running action-adventure franchise is known for its immersive sandbox gameplay and dynamic characters, with each new installment being a major event in the gaming industry.

Wedbush Securities analyst Michael Pachter noted that confirmation of the launch date eased investor concerns about potential delays. Take-Two also reaffirmed expectations for higher net bookings in fiscal 2026 and 2027, driven by “GTA VI” and other major releases.

Beyond “GTA VI,” Take-Two is set to release several high-profile titles this year, including “Borderlands 4” and “Mafia: The Old Country.”

While the company’s third-quarter bookings of $1.37 billion fell short of the $1.39 billion consensus, Take-Two posted adjusted earnings of 72 cents per share, beating analysts’ expectations of 57 cents. The company also noted that Zynga, which it acquired in 2022, has nearly completed its integration into the Take-Two ecosystem and should contribute more significantly to profitability moving forward.