Amazon's cloud system AWS reports weaker-than-expected income growth

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 financiers drove shares down sharply on Thursday due to weakness in the retailer's cloud computing system and lower-than-expected forecasts for first-quarter earnings and profit.

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

Amazon Chief Financial Officer Brian Olsavsky said he expected the capital investment run rate for this year to be roughly the exact same as in 2015's fourth quarter when the company spent $26.3 billion. Amazon has actually enhanced spending in particular to help develop synthetic intelligence software application.

The business's sales price quote for the first quarter failed to satisfy analysts ´ expectations, even if an unfavorable effect of $2 billion from last year ´ s Leap Day is consisted of. The business said it prepares for between $151 billion and $155 billion, compared with the typical quote of $158 billion. The cloud system, Amazon Web Services, reported a 19% increase in earnings to $28.79 billion, falling short of quotes of $28.87 billion, according to information compiled by LSEG. Amazon signs up with smaller cloud suppliers Microsoft and Google in reporting weak cloud numbers.

President Andy Jassy said the inconsistent circulation of computer chips had actually kept back some development in AWS. "We might be growing much faster, if not for some of the constraints on capability, and they are available in the type of chips from our third-party partners coming a bit slower than previously," he informed financiers on a teleconference.

The cloud weakness occurs as financiers have actually grown progressively impatient with Big Tech's multibillion-dollar capital costs and are for returns from large financial investments in AI.

"After very strong third-quarter numbers, this quarter the development rates all missed out on. That's what the market does not desire to hear," said Daniel Morgan, senior portfolio manager at Synovus Trust. He said this is especially true after the emergence of new competitors in expert system such as China's DeepSeek. Like its rivals, Amazon is investing greatly in artificial intelligence software application advancement. At its annual AWS conference in December it showed off new AI software application models that it hopes will draw new business and customer customers. Later this month, asteroidsathome.net it is set to launch its long-awaited Alexa generative expert system voice service after delays over concerns about the quality and speed, Reuters reported earlier today.

Competitors Microsoft and Google moms and dad Alphabet both published slowing cloud development in last year ´ s fourth quarter, sending shares lower. The business, along with Meta Platforms, said costs to develop infrastructure for artificial intelligence software application contributed to sharply greater awaited capital expenses for 2025, a total of around $230 billion between them.

Amazon's retail organization assisted balance out the cloud weakness, with the business reporting online sales development of 7% in the quarter to $75.56 billion. That compared to price quotes of $74.55 billion.

Amazon forecast operating revenue of $14 billion to $18 billion for the first quarter of 2025, missing a typical analyst quote of $18.35 billion.

The business reported profits of $187.8 billion in the 4th quarter, compared with the typical analyst price quote of $187.30 billion, according to data put together by LSEG.

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

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