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

Investors worried over first-quarter sales outlook

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

By Greg Bensinger, Deborah Mary Sophia

Feb 6 (Reuters) - Amazon.com investors drove shares down dramatically on Thursday due to weakness in the retailer's cloud computing unit and lower-than-expected projections for first-quarter revenue and revenue.

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

Amazon Chief Financial Officer Brian Olsavsky said he expected the capital expenditure run rate for this year to be approximately the like in 2015's fourth quarter when the company invested $26.3 billion. Amazon has actually increased costs in specific to assist establish synthetic intelligence software.

The company's sales 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 prepares for between $151 billion and $155 billion, compared to the typical price quote of $158 billion. The cloud system, Amazon Web Services, reported a 19% rise in income to $28.79 billion, disappointing quotes of $28.87 billion, according to information compiled by LSEG. Amazon signs up with smaller sized cloud suppliers Microsoft and Google in reporting weak cloud numbers.

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

The cloud weakness takes place as financiers have actually grown increasingly impatient with Big Tech's multibillion-dollar capital costs and are hungry for returns from significant financial investments in AI.

"After really strong third-quarter numbers, this quarter the growth rates all missed. That's what the market doesn't wish to hear," said Daniel Morgan, senior portfolio manager at Synovus Trust. He said this is especially real after the emergence of brand-new competitors in synthetic intelligence such as China's DeepSeek. Like its rivals, Amazon is investing greatly in artificial intelligence software application advancement. At its yearly AWS conference in December it displayed new AI software designs that it hopes will draw brand-new company and customer customers. 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 moms and dad Alphabet both published slowing cloud development in last year ´ s 4th quarter, git.soy.dog sending out shares lower. The business, along with Meta Platforms, said costs to develop infrastructure for artificial intelligence software added to sharply greater awaited capital expenses for 2025, an overall of around $230 billion in between them.

Amazon's retail service assisted balance out the cloud weak point, with the business reporting online 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 a typical analyst price quote of $18.35 billion.

The business reported income of $187.8 billion in the fourth quarter, compared with the average expert estimate of $187.30 billion, according to data put together by LSEG.

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

Net earnings nearly doubled to $20 billion from $10.6 billion a year earlier. The Seattle retailer reported earnings 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)