Amazon Surpasses Expectations, Plans Continued Investments

Amazon reported fourth-quarter results that exceeded analysts’ estimates, with strong revenue and earnings per share, leading to an over 8% surge in the stock during extended trading. Here are the key figures from Amazon’s Q4 report compared to estimates:

• Earnings per share: $1.00 vs. 80 cents expected by LSEG (formerly Refinitiv)
• Revenue: $170 billion vs. $166.2 billion expected by LSEG
• Amazon Web Services: $24.2 billion vs. $24.2 billion, according to StreetAccount
• Advertising: $14.7 billion vs. $14.2 billion, according to StreetAccount

For the first quarter, Amazon anticipates sales between $138 billion and $143.5 billion, representing an 8% to 13% growth. Analysts had expected revenue of $142.1 billion.

Amazon’s net income surged to $10.6 billion, or $1.00 per share, compared to $278 million, or 3 cents per share, in the same period the previous year. The company’s cost-cutting efforts, including laying off 27,000 employees and discontinuing some unproven ventures, have contributed to improved profitability.

Despite these cost-cutting measures, Amazon plans to maintain a careful approach to new investments. CFO Brian Olsavsky mentioned that while the company would continue to invest in new areas resonating with customers, it doesn’t view 2024 as a year focused solely on efficiency.

The fourth quarter saw a 14% jump in revenue to $170 billion, driven by the holiday shopping season and Amazon’s October Prime Day event, both of which surpassed expectations.

Sales at Amazon Web Services (AWS) increased by 13% in the fourth quarter to $24.2 billion, aligning with Wall Street forecasts. While this marks a slight uptick from the previous quarter’s 12% growth, it represents a deceleration from the year-ago period when sales expanded by 20%. AWS growth had slowed over the past year as businesses reduced their cloud spending, but Amazon sees a pickup in new workloads and increased interest in generative artificial intelligence (AI) products.

The profitable advertising unit reported a 27% year-over-year sales growth to $14.7 billion. Amazon has started displaying ads on Prime Video content, a move expected to generate significant new revenue. Olsavsky noted the company’s cautious approach to ad loads, aiming to keep them low despite witnessing enthusiasm from advertisers.

Overall, Amazon’s robust performance in the fourth quarter and its optimistic outlook for the first quarter showcase its resilience and ability to adapt to changing market dynamics. The company continues to focus on strategic investments while delivering strong financial results.