Amazon announced financial results for the fourth quarter ended December 31, 2024, and exceeded analyst projections with stronger fourth-quarter revenue and earnings per share. However, the company’s price fell more than 5% after the market closed, despite impressive results.

Amazon (AMZN) listed on Nasdaq closed at $238.83 on Thursday, almost 1.13% higher than previous day’s close. However, in the After-Hours trade, AMZN was down 4% and in the pre-market trade, the stock quotes 2.59% lower.

Amazon’s first quarter 2025 guidance has not gone down well with the global investors. As per the guidance, net sales are expected to be between $151.0 billion and $155.5 billion, or to grow between 5% and 9% compared with first quarter 2024.

“The main reason for this decline lies in the revenue forecast for the year’s first quarter. Amazon estimated its revenue would range between $151.0 billion and $155.5 billion, below the $158.33 billion expected by analysts. This lower forecast created uncertainty among investors, suggesting a possible growth slowdown amid a challenging economic environment and intense competition in the e-commerce and cloud sectors,” Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS.

This guidance also anticipates an unusually large, unfavorable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates. “Another factor that contributed to market caution was the strength of the U.S. dollar. Amazon anticipates this situation will reduce its revenue by approximately $2.1 billion. Given its global reach and dependence on international markets, exchange rate fluctuations can significantly impact the company’s financial results.” adds Giacomo.

For the Q1 2025, Amazon says the operating income is expected to be between $14.0 billion and $18.0 billion, compared with $15.3 billion in first quarter 2024.This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.

Amazon’s stock price drop appears to be due to short-term concerns, despite solid growth in the financials. Amazon investors need to keep an eye on dollar index and overall growth of the company.

Amazon’s net sales increased 10% to $187.8 billion in the fourth quarter, compared with $170.0 billion in fourth quarter 2023. The net income increased to $20.0 billion in the fourth quarter, or $1.86 per diluted share, compared with $10.6 billion, or $1.00 per diluted share, in fourth quarter 2023. Even the operating income increased to $21.2 billion in the fourth quarter, compared with $13.2 billion in fourth quarter 2023.

For the full year, net sales increased 11% to $638.0 billion in 2024, compared with $574.8 billion in 2023. Also, Net income increased to $59.2 billion in 2024, or $5.53 per diluted share, compared with $30.4 billion, or $2.90 per diluted share, in 2023.

Importantly, Free cash flow increased to $38.2 billion for the trailing twelve months, compared with $36.8 billion for the trailing twelve months ended December 31, 2023.

A huge push for investments in AI infrastructure is being seen from some of the big tech stocks. Interestingly, Amazon plans to increase its capital expenditures to $100 billion in 2025, surpassing last year’s $83 billion capex. Tech companies like Alphabet, Microsoft, and Meta are investing significant amounts in AI infrastructure, with Alphabet predicting a $75 billion investment, Microsoft announcing $80 billion, and Meta announcing $65 billion.

In the previous quarter, Amazon in AWS introduced their new Trainium2 AI chip, foundation models in Amazon Nova and a plethora of new models and features in Amazon Bedrock. Amazon also launched Amazon Haul, a new shopping experience in Amazon’s U.S. shopping app and mobile site, with ultra-low prices.

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