Amazon's cloud unit AWS reports weaker-than-expected revenue development

Investors worried over first-quarter sales outlook

Amazon's retail business offsets cloud weak point with 7% online sales growth

By Greg Bensinger, Deborah Mary Sophia

Feb 6 (Reuters) - Amazon.com financiers drove shares down sharply on Thursday due to weakness in the retailer's cloud computing system and lower-than-expected forecasts for first-quarter profits and profit.

Amazon's shares fell as much as 5% in extended trade after the fourth-quarter incomes report, eliminating about $90 billion worth of stock exchange worth, and were last down about 4.2%.

Amazon Chief Financial Officer Brian Olsavsky said he anticipated the capital expense run rate for this year to be approximately the exact same as last year's fourth quarter when the business spent $26.3 billion. Amazon has actually enhanced spending in particular to assist develop synthetic intelligence software.

The business's sales quote for the first quarter failed to meet analysts ´ expectations, yidtravel.com even if an unfavorable impact of $2 billion from in 2015 ´ s Leap Day is included. The business said it expects in between $151 billion and $155 billion, compared with the average estimate of $158 billion. The cloud system, Amazon Web Services, reported a 19% increase in earnings to $28.79 billion, falling short of estimates of $28.87 billion, visualchemy.gallery according to data assembled by LSEG. Amazon signs up with smaller cloud companies Microsoft and Google in reporting weak cloud numbers.

Ceo Andy Jassy said the inconsistent flow of computer chips had actually held back some growth in AWS. "We might be growing faster, if not for some of the constraints on capability, and they are available in the form of chips from our third-party partners coming a bit slower than in the past," he told financiers on a teleconference.

The cloud weakness happens as investors have grown progressively restless with Big Tech's multibillion-dollar capital spending and are hungry for returns from substantial investments in AI.

"After very strong third-quarter numbers, this quarter the growth rates all missed out on. That's what the marketplace doesn't desire to hear," said Daniel Morgan, senior portfolio manager at Synovus Trust. He said this is especially true after the introduction of new rivals in synthetic intelligence such as China's DeepSeek. Like its rivals, Amazon is investing heavily in artificial intelligence software application development. At its yearly AWS conference in December it displayed new AI software application models that it hopes will draw brand-new company and consumer clients. Later this month, it is set to launch its long-awaited Alexa generative expert system voice service after hold-ups over concerns about the quality and speed, Reuters reported previously today.

Competitors Microsoft and Google parent Alphabet both published slowing cloud development in in 2015 ´ s 4th quarter, sending shares lower. The business, together with Meta Platforms, said costs to develop facilities for artificial intelligence software contributed to sharply higher awaited capital investment for 2025, a total of around $230 billion in between them.

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

Amazon projection operating earnings of $14 billion to $18 billion for the very first quarter of 2025, missing out on an average analyst quote of $18.35 billion.

The business reported revenue of $187.8 billion in the 4th quarter, compared with the average analyst quote of $187.30 billion, according to data compiled by LSEG.

Advertising sales, a closely enjoyed metric, utahsyardsale.com rose 18% to $17.3 billion. That compares with the typical price quote of $17.4 billion.

Net income nearly doubled to $20 billion from $10.6 billion a year previously. The Seattle retailer reported profits 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)