Amazon.com Inc (NASDAQ:AMZN) stock fell 3.69% (As on February 7, 11:22:03 AM UTC-4, Source: Google Finance) after the company beat Wall Street’s expectations on fourth-quarter earnings and revenue today, but sales in its all-important cloud computing business came up short, and guidance for the current quarter was light. The company reported $28.79 billion in sales from the AWS unit, just below the target of $28.84 billion.
Moreover, the company also provided an update on the massive investment it has been pouring into its data center infrastructure, in order to support the industry’s rapid growth. During the quarter, Amazon’s capital expenditures reached $27.8 billion, which was almost double the $14.6 billion it spent a year earlier. AWS has been spending billions of dollars in order to buy up data center gear like Nvidia Corp.’s graphics processing units, which power the vast majority of the world’s AI workloads today. The company aims to boost its capital spending to $100 billion in fiscal 2025, up from $83 billion in fiscal 2024. According to him, the increased spending mainly relates to AWS, and is intended to support its AI services as well as the broader North American cloud infrastructure market.
Further, the company is stepping up its investments at a time when investors are becoming increasingly nervous about them due to the emergence of the Chinese AI startup DeepSeek Ltd. DeepSeek’s R1 model has shown it can match the performance of the very best models in the business, despite claims that it cost less than $6 million to develop. That revelation caused chaos in the financial markets last week, as it challenges the assumption that technology firms must spend billions of dollars to be able to compete.
AMZN in the fourth quarter of FY 24 has reported the adjusted earnings per share of $1.86, beating the analysts’ estimates for the adjusted earnings per share of $1.49. The company had reported the adjusted revenue growth of 10 percent to $187.79 billion in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $187.3 billion.
Looking ahead, Amazon said it’s anticipating revenue of between $151 billion and $155.5 billion in the current quarter. That surprised analysts, who had forecast sales of $158.5 billion. Amazon blamed the shortfall on the “unusually large, unfavorable impact” of foreign exchange rates, which amounts to an estimated $2.1 billion. Amazon’s forecast suggests revenue growth of between 5% and 9%, and if it comes in at the lower end of that range