Amazon Q4 sales beats estimates on cloud and e-commerce strength, shares rise
AMAZON.COM beat fourth-quarter revenue expectations on Thursday (Feb 1) on robust growth in its cloud business and online spending during the critical holiday shopping season, sending its shares up 5 per cent after the market close.
The company forecast current-quarter revenue of US$138 billion to US$143.5 billion. Analysts polled by LSEG expect US$142.13 billion.
Amazon Web Services (AWS), the world’s largest cloud services provider, posted revenue of US$24.2 billion in the fourth quarter, largely in line with analysts’ expectations of US$24.26 billion.
AWS CEO Andy Jassy in a statement touted the unit’s “continued long-term focus on customers and feature delivery”, citing efforts to incorporate generative AI into many of its services. The new features “are starting to be reflected in our overall results”, he said.
Amazon shares have climbed over 6 per cent this year and 41 per cent in the past 12 months.
“Amazon was a clear winner in the 2023 holiday season, thanks to its commanding presence over an extended shopping period and a renewed emphasis on speedier delivery and essential categories prioritised by consumers,” said Insider Intelligence senior analyst Sky Canaves. He forecasts Amazon expanding its US e-commerce market share this year.
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“The highly profitable ads business was lifted by demand from sellers on the fast-growing third-party marketplace,” Canaves said. “But all eyes will be on AWS, where the mild acceleration of growth ... leaves some lingering doubts about whether the cloud unit will be able to hold its own against rivals.”
Earlier this week, Microsoft and Alphabet reported generous increases in their cloud revenue in the December quarter, beating Wall Street estimates, as customers lined up to test new AI features and build their own AI services.
But mounting costs of developing these cutting-edge features irked investors hoping for a big boost to sales from the new technology, sending their shares down.
Amazon’s fourth-quarter sales rose 14 per cent to US$170 billion, beating analysts’ average estimate of US$166.21 billion, according to LSEG data. Adjusted profit of US$1 per share beat an average estimate of 80 US cents per share. REUTERS
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