The company called out an ‘unusually large, unfavorable impact’ from currency, which is expected to hit first-quarter results.
Shares of Amazon.com Inc. slid after hours on Thursday, after the online-retail and cloud-services giant offered a first-quarter outlook that came up short of Wall Street’s expectations while forecasting bumpy trends in its cloud business and more heavy spending on artificial intelligence.
The forecast arrived as analysts and tech critics try to dig more deeply into Big Tech’s astronomical AI budgets, and after the China-based DeepSeek AI platform rattled stocks last week on claims that it could make the same technology as its U.S. rivals with far less money, chips and energy. The expectations for Amazon’s
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large AWS cloud-computing segment followed disappointing cloud growth from some of its rivals.
For the first quarter, Amazon modeled revenue of $151 billion to $155.5 billion, compared with the $158.6 billion that analysts were looking for. Amazon mentioned an “unusually large, unfavorable impact” from currency, expected to be $2.1 billion for the first quarter, as the dollar strengthens. Also, the company noted that it had $1.5 billion in sales last year related to the leap day.
The company also expects $14 billion to $18 billion in operating income for the period, while analysts had been projecting $18.3 billion.
Amazon shares slid 4% after hours on Thursday. Still, the stock is up 40.6% over the past 12 months.
Executives, during the company’s earnings call, said capital expenses were $26.3 billion in the fourth quarter. That rate, they said, would be “reasonably representative” of the four quarters ahead. Much of that would be on AI for its cloud-computing platform.
Large technology players have shown no signs of slowing down their spending ambitions as they chase big opportunities in AI. Meta Platforms Inc.
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and Alphabet Inc.
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both offered capital-expense forecasts for the new year that were far higher than what analysts were expecting.
Chief Executive Andy Jassy, during Amazon’s earnings call on Thursday, said he was impressed by DeepSeek, and said that AI developers would continue to learn from one another and use different models for different work. He said that while lower costs for technology — particularly AI’s ability to analyze data and make predictions — didn’t necessarily mean companies would spend less, it would still offer benefits.
“I think it will make it much easier for companies to be able to infuse all their applications with inference and with generative AI,” Jassy said. “If you run a business like we do, we want to make it as easy as possible for customers to be successful.”
He added: “The cost of inference coming down is going to be very positive for customers and for our business.”
Amazon has already made DeepSeek available on its SageMaker and Bedrock AI development platforms. The company has introduced its new Trainium2 custom chip for AI as well as internal foundation models, and has pitched its own semiconductor offerings as a lower-cost solution to help developers build out their own AI technology.
Still, earlier in the call, Jassy said he expected trends for the AWS cloud-computing business to be uneven in the years ahead, while adding that the business would stay strong.
“AWS is a reasonably large business by most folks’ standards,” he said. “And though we expect growth will be lumpy over the next few years as enterprise adoption cycles, capacity considerations and technology advancements impact timing, it’s hard to overstate how optimistic we are about what lies ahead for AWS customers and business.”
Chief Financial Officer Brian Olsavsky also said that margins for that segment would “fluctuate” over time, driven by investments in the business.
Amazon, for the fourth quarter, failed to show upside in AWS, which was the case for cloud rivals Alphabet and Microsoft Corp.
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as well. The company reported $28.8 billion in cloud-computing revenue for the fourth quarter, whereas analysts were looking for $28.9 billion. That amounted to 18.9% growth.
See also: Alphabet is showing the downside of being an AI stock
A BofA analyst wrote prior to the earnings report that he thought investor expectations were in the 19% to 20% range. Amazon’s cloud-computing rivals mentioned that they experienced capacity constraints in the latest quarter, meaning they couldn’t keep up with all the artificial-intelligence demand for their cloud services.
Overall revenue for Amazon’s latest quarter came in at $187.8 billion, while the FactSet consensus was for $187.3 billion. The company saw a 10% boost in North America sales, to $115.6 billion, and an 8% rise in international sales, to $43.4 billion.
Amazon posted $21.2 billion in operating income, ahead of the FactSet consensus view for $19.0 billion.
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Amazon reported those results as its e-commerce segment tries to accelerate delivery times, bring robotics to its warehouses and set up more same-day delivery sites for shoppers. Executives also called out momentum in its advertising business, as the company continues its push into streaming and live broadcasts.
But, as with previous earnings calls, the focus was largely on AI. Management, during Thursday’s call, said Amazon had around 1,000 generative AI applications that they’ve either built or are in the process of developing.
Along with its Rufus shopping assistant, Jassy called out things like Amazon Lens, which can search items based on photos. He also noted a service that helps with sizing clothing, which draws from clothing makers’ catalogs and compares them against one another.
“So we know which brands tend to run big or small relative to each other,” he said. “So when you come to buy a pair of shoes, for instance, it can recommend what size you need.”
