Amazon Says Profits Rose 88% but Cautions Growth May Slow

Amazon experienced solid consumer sales growth and a rebound in its cloud computing division in the latest quarter. However, the company cautioned investors on Thursday about a potential slowdown in future growth.https://svtoday.org/

Revenue for the October-to-December period reached $187.8 billion, reflecting a 10 percent increase from the previous year. Net profit surged by 88 percent to $20 billion, aligning closely with Wall Street expectations.

Looking ahead, Amazon projected a softer start to 2025, forecasting revenue growth between 5 and 9 percent in the current quarter. Additionally, the company warned that operating profit could decline compared to the previous year.

Amazon Web Services (AWS) saw a 19 percent revenue increase, reaching $28.8 billion. This performance—largely attributed to Amazon’s investments in artificial intelligence—stood out, especially as competitors Microsoft and Alphabet recently reported cloud computing results that fell short of investor expectations. By contrast, AWS had only grown 13 percent in the same quarter of 2023.

Investors remain particularly focused on AWS, as it has become a major driver of Amazon’s profitability. The cloud division’s operating profit totaled $10.6 billion, contributing to half of Amazon’s overall operating profit.

The tech industry has been unsettled by the recent release of a highly efficient AI system by Chinese startup DeepSeek. In response, Amazon quickly made DeepSeek’s system available to its customers, highlighting its commitment to providing flexible AI solutions that allow users to integrate various AI tools seamlessly.

During an investor call, CEO Andy Jassy suggested that AI adoption would likely follow previous technological trends. As costs decline, he expects customers to explore new applications they previously deemed too expensive, ultimately leading to increased overall spending.

Amazon invested $26 billion in the quarter on data centers, warehouses, and other infrastructure projects, bringing its total capital expenditures for the year to over $77 billion. Jassy noted that cloud computing sales could have been higher if Amazon had greater data center capacity, particularly AI chips.

The company indicated that its current capital spending pace would continue through 2025, suggesting that total investments could exceed $100 billion this year.

Despite these expenditures, Amazon ended the year with a record cash reserve of more than $82 billion.

Following the earnings announcement, Amazon’s stock declined by over 4 percent in after-hours trading.

In its North American retail division—which includes product sales, advertising, and Prime memberships—Amazon posted a 10 percent increase in sales during the critical holiday season. The retail sector as a whole reported surprisingly strong holiday sales.

Consumers are purchasing more from Amazon as the company accelerates delivery times. By restructuring its operations to position inventory closer to customers, Amazon has made shipping faster and more cost-efficient. In 2024, the company delivered over nine billion items on the same or next day, up from more than seven billion in 2023.

Amazon’s North American operating margin exceeded 8 percent, a remarkable improvement considering that two years ago, the segment barely broke even. The company has enhanced its profitability by optimizing logistics and expanding high-margin businesses such as advertising, which generated more than $17 billion in revenue.

By the end of the year, Amazon had 1,556,000 employees, reflecting a modest 2 percent increase.