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

Investors worried over first-quarter sales outlook

Amazon's retail company offsets cloud weakness 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 system and lower-than-expected projections for first-quarter income and revenue.

Amazon's shares fell as much as 5% in extended trade after the fourth-quarter incomes report, erasing 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 like last year's fourth quarter when the business spent $26.3 billion. Amazon has actually improved costs in specific to assist establish expert system software.

The business's sales price quote for the very first quarter failed to meet experts ´ expectations, even if an unfavorable 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 to the average quote of $158 billion. The cloud unit, Amazon Web Services, reported a 19% increase in income to $28.79 billion, falling short of price quotes of $28.87 billion, utahsyardsale.com according to data put together by LSEG. Amazon joins smaller sized cloud companies Microsoft and Google in reporting weak cloud numbers.

Chief Executive Officer Andy Jassy said the inconsistent flow of computer system chips had held back some development 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 bit slower than before," he told financiers on a conference call.

The cloud weakness happens as investors have grown progressively impatient with Big Tech's multibillion-dollar capital costs and are starving for returns from hefty investments in AI.

"After really strong third-quarter numbers, this quarter the development rates all missed out on. 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 emergence of brand-new rivals in synthetic intelligence such as China's DeepSeek. Like its competitors, Amazon is investing greatly in expert system development. At its yearly AWS conference in December it displayed brand-new AI software application models that it hopes will draw brand-new company and customer customers. Later this month, it is set to release its long-awaited Alexa generative artificial intelligence voice service after delays over concerns about the quality and speed, Reuters reported earlier today.

Competitors Microsoft and Google parent Alphabet both published slowing cloud development in in 2015 ´ s 4th quarter, sending out shares lower. The companies, along with Meta Platforms, said expenses to develop infrastructure for drapia.org expert system software added to sharply greater awaited capital investment for 2025, a total of around $230 billion between them.

Amazon's retail service helped balance out the cloud weak point, with the company reporting online sales growth of 7% in the quarter to $75.56 billion. That compared with estimates of $74.55 billion.

Amazon projection operating profit of $14 billion to $18 billion for the very first quarter of 2025, missing an average analyst quote of $18.35 billion.

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

Advertising sales, accc.rcec.sinica.edu.tw a carefully watched metric, increased 18% to $17.3 billion. That compares with the average quote of $17.4 billion.

Net earnings almost 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