Amazon's cloud unit AWS reports weaker-than-expected earnings growth

Investors concerned over first-quarter sales outlook

Amazon's retail business offsets cloud weakness with 7% online sales development

By Greg Bensinger, Deborah Mary Sophia

Feb 6 (Reuters) - Amazon.com financiers drove shares down sharply on Thursday due to weak point in the retailer's cloud computing unit and lower-than-expected projections for first-quarter revenue and earnings.

Amazon's shares fell as much as 5% in prolonged trade after the fourth-quarter profits report, removing about $90 billion worth of stock market value, and were last down about 4.2%.

Amazon Chief Financial Officer Brian Olsavsky said he expected the capital investment run rate for this year to be approximately the same as last year's fourth quarter when the business spent $26.3 billion. Amazon has actually increased spending in particular to help develop expert system software application.

The company's sales price quote for the very first quarter failed to meet experts ´ expectations, even if a negative effect of $2 billion from last year ´ s Leap Day is consisted of. The business said it anticipates in between $151 billion and $155 billion, compared with the typical quote of $158 billion. The cloud unit, Amazon Web Services, reported a 19% rise in revenue to $28.79 billion, falling brief of estimates of $28.87 billion, according to data compiled by LSEG. Amazon signs up with smaller sized cloud service providers Microsoft and Google in reporting weak cloud numbers.

President Andy Jassy said the irregular circulation of computer system chips had actually held back some growth in AWS. "We could be growing quicker, if not for some of the constraints on capability, and they are available in the kind of chips from our third-party partners coming a little bit slower than previously," he informed investors on a teleconference.

The cloud weakness takes place as investors have actually grown significantly impatient with Big Tech's multibillion-dollar capital spending and forum.pinoo.com.tr are starving for returns from large investments in AI.

"After really strong third-quarter numbers, this quarter the growth rates all missed out on. That's what the market doesn't want to hear," said Daniel Morgan, senior portfolio supervisor at Synovus Trust. He said this is particularly real after the emergence of brand-new competitors in such as China's DeepSeek. Like its competitors, Amazon is investing heavily in expert system software application development. At its annual AWS conference in December it displayed new AI software application designs that it hopes will draw new company and customer customers. Later this month, it is set to release its long-awaited Alexa generative expert system voice service after delays over concerns about the quality and speed, Reuters reported previously today.

Competitors Microsoft and Google moms and dad Alphabet both posted slowing cloud development in in 2015 ´ s 4th quarter, sending shares lower. The companies, along with Meta Platforms, accc.rcec.sinica.edu.tw said expenses to establish infrastructure for artificial intelligence software application added to dramatically higher awaited capital expenditures for 2025, an overall of around $230 billion in between them.

Amazon's retail organization helped offset the cloud weakness, with the company reporting online sales growth of 7% in the quarter to $75.56 billion. That compared to estimates of $74.55 billion.

Amazon forecast operating profit of $14 billion to $18 billion for the very first quarter of 2025, missing a typical expert estimate of $18.35 billion.

The company reported revenue of $187.8 billion in the fourth quarter, compared with the typical expert quote of $187.30 billion, according to data assembled by LSEG.

Advertising sales, a carefully watched metric, wiki.vst.hs-furtwangen.de rose 18% to $17.3 billion. That compares with the typical price quote of $17.4 billion.

Net earnings nearly doubled to $20 billion from $10.6 billion a year previously. The Seattle retailer reported revenues of $1.86 per share, compared to expectations of $1.49 per share.

(Reporting by Deborah Sophia in Bengaluru and Greg Bensinger in San Francisco; Additional reporting by Noel Randewich in Oakland, California; Editing by Shounak Dasgupta and Matthew Lewis)