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Amazon’s Strong Earnings Show Fails to Offset Weak Guidance Gloom
By Prathapan Bhaskaran - Feb 07, 2025, 12:32 PM ET
Last Updated - Feb 07, 2025, 12:55 PM EST
The company “anticipates an unusually large, unfavorable impact” from foreign exchange rates in the first quarter of 2025
Amazon [AMZN] reported better-than-expected financial numbers for the fourth quarter, but disappointing guidance is putting pressure on the shares.
The tech giant’s net income almost doubled to $20 billion from $10.6 billion a year ago. Its earnings per share were $1.86, compared to $1 a share for the same quarter of the previous year, the company said in an SEC filing on February 6, 2025.
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By way of guidance, the company said it “anticipates an unusually large, unfavorable impact” from foreign exchange rates in the first quarter of 2025. The impact amounts to $2.1 billion, or 1.5%, Amazon said. The U.S. dollar index — which measures the greenback against a basket of rivals — hit its highest level in more than two years last month, ahead of President Donald Trump’s inauguration. The dollar climbed steadily from late November through mid-January and has since fallen slightly.
Based on Amazon’s forecast, the company expects revenue growth of only 5% to 9% in the first quarter. At the low end of the range, that would mark the slowest growth on record. Amazon went public in 1997.
Cost-cutting campaign
Amazon President and CEO Andy Jassy has promised to continue the cost-cutting campaign that began in 2022 well into 2025. The company laid off more than 27,000 corporate employees in 2022 and 2023 and the downsizing continued in 2024. It could continue into the new year.
“The holiday shopping season was the most successful yet for Amazon and we appreciate the support of our customers, selling partners, and employees who helped make it so,” he said. “When we look back on this quarter several years from now, I suspect what we’ll most remember is the remarkable innovation delivered across all of our businesses, none more so than in AWS where we introduced our new Trainium2 AI chip, our own foundation models in Amazon Nova, a plethora of new models and features in Amazon Bedrock that give customers flexibility and cost savings, liberating transformations in Amazon Q to migrate from old platforms, and the next edition of Amazon SageMaker to pull data, analytics, and AI together more concertedly. These benefits are often realized by customers (and the business) several months down the road, but these are substantial enablers in this emerging technology environment and we’re excited to see what customers build.”
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The company’s net sales increased 10% to $187.8 billion in the fourth quarter, compared with $170.0 billion in Q4 2023. Excluding the $0.9 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 11% compared with fourth quarter 2023, the report said.
Huge growth in North America segment sales
Amazon CFO Brian Olsavsky said the company expects to boost capital expenditures to $100 billion in 2025, up from spending of roughly $83 billion in 2024. Olsavsky said the jump in spending “primarily relates to AWS, including to support demand for our AI services, as well as tech infrastructure to support our North America and international segments.”
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