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.