Dubai – UAE, Amazon’s Q4 earnings for 2024 were a mixed bag, with strong year-over-year revenue growth but a disappointing outlook for Q1, leaving Wall Street with concerns. The company reported a 10% increase in revenue, reaching USD$187 billion, largely driven by a robust holiday season and stronger-than-expected online sales. Operating income also exceeded analysts’ estimates. However, the company’s forecast for Q1 revenue and operating income missed expectations, due in part to potential tariffs and shifts in U.S. policy.
While Amazon’s e-commerce business showed resilience, its cloud division, Amazon Web Services (AWS), reported slower-than-expected growth of 19%. AWS, which constitutes less than 20% of Amazon’s total revenue, remains a key growth engine for the company. In 2024, AWS contributed nearly 60% of Amazon’s operating income, at USD$39.3 billion, underlining the pivotal role of AI in the company’s long-term growth.
“While Amazon’s results aren’t catastrophic, they are a bit of a disappointment,” said Josh Gilbert, Market Analyst at eToro. “AWS, a critical driver of growth, didn’t show the acceleration expected despite significant investments in AI and cloud infrastructure. This is a crucial moment for Amazon as it continues to ramp up its spending to meet the growing demands of AI.”
Despite the challenges facing Amazon and other tech giants like Microsoft and Google, the overall demand for cloud and AI services continues to exceed supply. All three companies are heavily investing in AI technologies, positioning themselves for the long-term boom in the sector. According to Gilbert, “Investors may be worried about the current results from these hyperscalers, but the rapid growth in AI demand, coupled with their increased spending, suggests that the sector’s long-term prospects remain strong.”
Looking ahead, Amazon’s future growth will likely hinge on the continued expansion of AI capabilities. While the immediate outlook may be tempered by the current challenges, the long-term potential remains robust.
“The AI boom is still in its early stages, and as capacity increases, so will revenue and profit for Amazon. Patience is required, but investors should keep an eye on the horizon,” Gilbert concluded.
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