Amazon Falls Short of Analyst Estimates, Signals Investment in AI
Amazon.com Inc. (AMZN) reported lower-than-expected profit projections for the current quarter, indicating continuous investment in artificial intelligence (AI) services.
Financial Performance
* Operating income for Q1 2025 projected to range from $14 billion to $18 billion, below analyst estimates of $18.2 billion.
* First-quarter sales expected to reach $155.5 billion, against an average estimate of $158.6 billion.
Strategic Focus and AI Investment
* CEO Andy Jassy prioritizing e-commerce, cloud computing, and advertising as core business pillars.
* Company investing heavily in data centers and homegrown chips to support AI development and challenge Nvidia Corp.'s market leadership.
Analyst Insights
* Gil Luria from DA Davidson & Co. highlights currency headwinds and year-over-year comparisons as factors in the lower guidance.
* The extra day in Q1 2024 contributed approximately $1.5 billion to sales.
AWS Revenue and Competition
* Amazon Web Services (AWS) revenue grew 19% to $28.8 billion, meeting analyst estimates.
* Cloud rivals Alphabet Inc. (GOOGL) and Microsoft Corp. (MSFT) recently reported challenges in meeting demand for AI products due to capacity constraints.
Investment and Growth
* Amazon invested $83 billion in property and equipment in 2024, primarily supporting AI development.
* Quarterly revenue increased 10% to $187.8 billion, outpacing operating expenses growth of 6.2%.