Amazon reported better-than-expected fourth-quarter earnings but disappointed investors with its weak guidance, leading to concerns about a slowdown in the artificial intelligence (AI) industry. The e-commerce giant’s shares fell more than 4% after the earnings report despite a 9% rise in stock value for the year.
The weak guidance was attributed to potential foreign exchange impacts and increased spending on AI. Amazon expects revenue between $151 billion and $155.5 billion, below analyst estimates of $158.5 billion. The company forecasts operating income between $14 billion and $18 billion, falling short of the expected $18.2 billion.
The US tech industry is facing challenges due to capacity constraints and heavy investments in data center expansion to meet surging demands. Chinese startup DeepSeek’s AI mode R1 raised concerns about valuation among US tech giants. Despite these challenges, Amazon reported a 10% increase in revenue to $187.8 billion in the fourth quarter, driven by AI development and the holiday season.
Amazon Web Services (AWS) showed a 19% annual growth rate, with CEO Andy Jassy highlighting the company’s focus on innovation in AI with Trainium2 and Amazon Nova. Online Stores and Advertising Services segments also saw growth of 8% and 18% year on year, respectively. Online Stores remained the largest revenue contributor, while the digital advertising platform ranked third globally.
Overall, CEO Andy Jassy expressed gratitude for the support during the holiday season, which was the most successful yet for Amazon. Despite the concerns, Amazon continues to innovate and adapt in the competitive tech industry.
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