Amazon's cloud unit AWS reports earnings development

Investors worried over first-quarter sales outlook

Amazon's retail service offsets cloud weakness 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 weak point in the retailer's cloud computing unit and lower-than-expected projections for first-quarter earnings and profit.

Amazon's shares fell as much as 5% in extended trade after the fourth-quarter revenues report, eliminating 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 expense run rate for this year to be approximately the exact same as in 2015's 4th quarter when the company invested $26.3 billion. Amazon has actually increased costs in particular to assist develop artificial intelligence software.

The company's sales price quote for the very first quarter failed to satisfy analysts ´ expectations, even if an unfavorable impact of $2 billion from last year ´ s Leap Day is consisted of. The business said it expects between $151 billion and $155 billion, compared to the typical estimate of $158 billion. The cloud unit, Amazon Web Services, reported a 19% increase in income to $28.79 billion, falling short of estimates of $28.87 billion, freechat.mytakeonit.org according to information put together by LSEG. Amazon signs up with smaller cloud companies Microsoft and Google in reporting weak cloud numbers.

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

The cloud weak point occurs as financiers have grown progressively restless with Big Tech's multibillion-dollar capital costs and are starving for returns from hefty financial investments in AI.

"After really strong third-quarter numbers, this quarter the growth rates all missed. That's what the marketplace doesn't wish to hear," said Daniel Morgan, senior portfolio supervisor at Synovus Trust. He said this is especially real after the development of new competitors in expert system such as China's DeepSeek. Like its competitors, Amazon is investing heavily in synthetic intelligence software application advancement. At its annual AWS conference in December it displayed brand-new AI software application designs that it hopes will draw brand-new service and customer customers. Later this month, it is set to release its long-awaited Alexa generative synthetic intelligence 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 growth in in 2015 ´ s 4th quarter, sending shares lower. The companies, in addition to Meta Platforms, said expenses to establish facilities for expert system software added to greatly higher awaited capital expenditures for 2025, an overall of around $230 billion between them.

Amazon's retail service helped balance out the cloud weakness, with the company reporting online sales development 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 first quarter of 2025, missing a typical analyst estimate of $18.35 billion.

The business reported profits of $187.8 billion in the 4th quarter, compared with the typical analyst quote of $187.30 billion, according to information assembled by LSEG.

Advertising sales, a closely seen metric, increased 18% to $17.3 billion. That compares to the average estimate of $17.4 billion.

Earnings nearly doubled to $20 billion from $10.6 billion a year earlier. The Seattle retailer reported incomes of $1.86 per share, compared with 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)