Amazon’s Stock Dips On Soft Forward Guidance
Amazon’s (AMZN) stock is down 3% after weak forward guidance overshadowed strong quarterly results from the e-commerce company.For the fourth quarter of 2024, Seattle-based Amazon announced earnings per share (EPS) of $1.86 U.S., which was well ahead of the $1.49 U.S. consensus expectation of analysts. The profit nearly double from $1 U.S. per share a year earlier. Revenue in the period totaled $187.79 billion U.S., which was ahead of the $187.30 billion U.S. forecast on Wall Street. Sales were up 10% from a year ago.Among the company’s business units, Amazon Web Services (AWS) that focuses on cloud computing posted revenue of $28.8 billion U.S., which matched analysts’ estimates. Cloud computing revenue grew 19% during the quarter compared to 13% a year earlier. Advertising sales of $17.3 billion U.S. were slightly below forecasts that called for $17.4 billion U.S.Despite the strong print, Amazon offered a weak outlook for the current first quarter of 2025, saying that it expects sales between $151 billion U.S. and $155.5 billion U.S. Wall Street had been looking for Q1 2025 revenue of $158.5 billion U.S. The soft guidance was blamed on impacts from foreign exchange rates.The U.S. dollar has risen steadily against other currencies since the American election last November, causing issues for companies that have international operations. Based on Amazon’s forecast, the company only expects revenue growth of 5% to 9% in the current quarter. The low end of that range would be the slowest growth on record for Amazon.The company’s capital expenditures in the final quarter of last year totaled $27.8 billion U.S., up from $14.6 billion U.S. a year earlier. The company has been allocating billions of dollars to data centres and equipment to run its artificial intelligence (A.I.) products. Amazon Chief Executive Officer (CEO) Andy Jassy highlighted the company’s A.I. investments in the earnings release, including a new A.I. model called “Nova” and its Trainium microchips.The stock of Amazon has gained 40% in the last 12 months to trade at $238.83 U.S. per share.
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