Amazon Surpasses Expectations with Strong Q4 Results

Amazon’s shares surged in late trading Thursday as the e-commerce and cloud computing giant reported impressive fourth-quarter results, outperforming market expectations. The robust performance was fueled by strength in Amazon’s core e-commerce business, which experienced a robust holiday season, along with sustained growth in advertising revenue. Amazon Web Services (AWS) business also saw a significant 13% expansion in the quarter, aligning with estimates.

Here are key highlights from Amazon’s Q4 report:

• Total sales reached $170 billion, marking a 14% increase and surpassing the forecasted range of $160 billion to $167 billion.
• Profits per share stood at $1, exceeding the Wall Street consensus forecast of 79 cents.
• Operating income soared to $13.2 billion, surpassing the guidance range of $7 billion to $11 billion.
• AWS revenue amounted to $24.2 billion, a 13% increase in line with Wall Street estimates.
• Online store sales totaled $70.5 billion, up 9%, surpassing the Street consensus at $68.7 billion.
• Revenue from third-party seller services reached $43.6 billion, up 20%, and exceeded consensus expectations.
• Advertising revenue witnessed a robust 27% increase to $14.7 billion, well above the Street consensus at $14 billion.
• Subscription revenue rose to $10.5 billion, up 14%, slightly exceeding the Street forecast at $10.3 billion.

Looking ahead to the first quarter, Amazon anticipates revenue between $138 billion and $143.5 billion, reflecting an 8% to 13% increase, with operating income ranging from $8 billion to $12 billion. The Street consensus had projected $142.3 billion in revenue and operating income of $8.8 billion.

CEO Andy Jassy expressed satisfaction with the company’s performance, highlighting the record-breaking holiday season and the continuous focus on innovation and customer experience improvements across Amazon’s businesses. Following the report, Amazon shares surged by 7.5% in after-hours trading, reflecting investor confidence in the company’s strong financial results and future prospects.

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.

Later, on a call with analysts, he said generative AI revenue was still relatively small, and that he expected the technology to drive tens of billions of dollars of revenue over the next several years. He said that virtually every consumer business Amazon operated already had or would have generative AI offerings.