Amazon reports strong earnings for Q4, but stocks dip due to guidance for the 1st quarter
Amazon on Thursday reported better-than-expected revenue and profits for the holiday shopping period, but its stocks dipped in after-hours trading due to disappointing guidance for the current quarter.
The Seattle-based e-commerce and technology company said its revenue for the October-December period totaled $187.8 billion, a 10% jump compared to the same period in 2023. Profits came out to $20 billion while earnings per share reached $1.86, higher than the $1.49 that analysts surveyed by FactSet had anticipated.
But the company said it expected revenue for the current quarter to be between $151 billion and 155.5 billion, lower than the $158.56 billion that analysts were expecting. The guidance anticipates “an unusually large, unfavorable impact” from foreign exchange rates, the company said.
Amazon is the biggest online shopping destination in the U.S. and has long been a beneficiary of consumer spending during the holidays. As it has done in recent years, the company in October began offering promotions intended to lure early holiday shoppers. It advertised other discounts during the three-month period, including on major sales days such as Black Friday and Cyber Monday.
Amazon on Thursday reported it saw $75.5 billion in revenue for its online shopping business, up 7% from the same period in 2023.
Across the retail industry, holiday sales in November and December were better than expected compared with the previous year as lower inflation on holiday goods enticed shoppers to buy, according to The National Retail Federation. Online shopping also saw record sales levels, Adobe Analytics reported in January.
Sales for Amazon Web services, the company’s prominent cloud computing unit, rose 19% during the fourth quarter. But it fell slightly below analysts expectations.
Amazon is one of the biggest players in the competitive tech race around generative artificial intelligence. Like other tech companies, it has ramped up investments in the technology and is spending billions to expand data centers that support AI and cloud computing.
The company's quarterly report also comes as the retail industry is absorbing a new 10% tariff President Donald Trump imposed on Chinese imports on Tuesday. Tariffs on Canada and Mexico have been put on hold for about a month.
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