Amazon.com shares slipped Thursday after it projected weaker-than-expected sales for the first quarter, even as it spent a record amount on capital expenditure to build infrastructure for artificial-intelligence services.
The Wall Street journal reports the company’s net sales rose 10% from a year earlier to $187.79 billion for the three months through December. Net income rose 88% to $20 billion. Its sales were in line with analysts’ expectations, while its profit was higher than predicted.
Revenue from Amazon’s cloud-computing unit, Amazon Web Services, rose 19% to $28.79 billion, slightly lower than the $28.87 billion that analysts polled by FactSet had expected. Analysts said they were closely monitoring this number after disappointing cloud-computing results from Alphabet and Microsoft.
Advertising revenue increased 18% to $17.3 billion, as brands continue to spend heavily for prominent positioning on Amazon’s app. In recent years, Amazon has emerged as one of the top digital ad companies, behind only Alphabet and Meta in the U.S.
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| Andy Jassy |
The company’s stock—which has climbed roughly 40% in the past 12 months—fell about 3% in after-hours trading on Thursday.
The company’s capital expenditure for the fourth quarter totaled $27.83 billion, its highest ever. Last year, Amazon said that it planned to spend about $75 billion on capital expenditure in 2024 and more in 2025 as part of a push to build generative AI services.
Top tech companies have been boosting spending on the expensive chips, data centers and real estate needed to meet the rising demand for computing power for AI.
Amazon Chief Executive Andy Jassy wants to make Amazon an AI leader. As the world’s largest cloud-service provider, Amazon is in a good position to profit from AI. The company has created special teams to drive generative AI innovation and has released a flurry of services, including an AI shopping assistant.
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