Amazon's cloud unit AWS reports weaker-than-expected profits growth

Investors concerned over first-quarter sales outlook

Amazon's retail organization offsets cloud weak point with 7% online sales development

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 forecasts for first-quarter revenue and earnings.

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

Amazon Chief Financial Officer Brian Olsavsky said he anticipated the capital investment run rate for this year to be roughly the exact same as last year's fourth quarter when the company invested $26.3 billion. Amazon has actually increased costs in particular to assist develop artificial intelligence software.

The sales price quote for the first quarter failed to satisfy analysts ´ expectations, even if a negative effect of $2 billion from in 2015 ´ s Leap Day is included. The business said it anticipates in between $151 billion and $155 billion, compared with the typical price quote of $158 billion. The cloud system, Amazon Web Services, reported a 19% rise in income to $28.79 billion, disappointing price quotes of $28.87 billion, according to information assembled by LSEG. Amazon signs up with smaller cloud suppliers Microsoft and classihub.in Google in reporting weak cloud numbers.

Chief Executive Officer Andy Jassy said the inconsistent circulation of computer system chips had held back some growth in AWS. "We could be growing faster, if not for some of the constraints on capacity, and they are available in the form of chips from our third-party partners coming a little bit slower than previously," he informed financiers on a conference call.

The cloud weakness occurs as financiers have actually grown progressively impatient with Big Tech's multibillion-dollar capital costs and dokuwiki.stream are hungry for returns from significant investments in AI.

"After very strong third-quarter numbers, this quarter the development rates all missed. That's what the market does not want to hear," said Daniel Morgan, senior portfolio manager at Synovus Trust. He said this is particularly real after the emergence of brand-new competitors in artificial intelligence such as China's DeepSeek. Like its competitors, Amazon is investing greatly in expert system software development. At its annual AWS conference in December it showed off new AI software models that it hopes will draw brand-new service and consumer customers. Later this month, forum.altaycoins.com it is set to launch its long-awaited Alexa generative synthetic intelligence voice service after delays over concerns about the quality and speed, Reuters reported earlier this week.

Competitors Microsoft and Google parent Alphabet both published slowing cloud development in last year ´ s 4th quarter, sending shares lower. The companies, in addition to Meta Platforms, said expenses to develop infrastructure for expert system software application added to dramatically greater awaited capital expenditures for 2025, an overall of around $230 billion between them.

Amazon's retail business assisted offset the cloud weak point, with the business reporting online sales growth of 7% in the quarter to $75.56 billion. That compared to quotes of $74.55 billion.

Amazon forecast operating earnings of $14 billion to $18 billion for the first quarter of 2025, missing a typical analyst quote of $18.35 billion.

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

Advertising sales, a closely enjoyed metric, increased 18% to $17.3 billion. That compares with the average price quote of $17.4 billion.

Earnings nearly doubled to $20 billion from $10.6 billion a year previously. 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)