But worry about AI

Record Christmas makes Amazon’s cash register ring

(Bild: HANS PUNZ / APA / picturedesk.com)

Online retail giant Amazon exceeded analysts' expectations in the fourth quarter of 2024 thanks to a flourishing Christmas shopping season. CEO Andy Jassy spoke of the "most successful Christmas shopping season ever". However, the joy was dampened by a weakening outlook and slowing growth in the cloud division. Investors on Wall Street reacted with a huff

The outlook for the first quarter was also disappointing. As a result, Amazon shares fell by more than four percent in after-hours trading on Wall Street.

Revenues one billion higher than expected
According to the figures, Group sales rose by ten percent to 187.8 billion dollars (181.27 billion euros) in the 2024 financial statements. At 75.56 billion dollars, revenue from online retail was around one billion dollars higher than forecast. Although the cloud subsidiary Amazon Web Services (AWS) grew by 19 percent to 28.79 billion dollars, analysts had hoped for almost 100 million dollars more.

"That's not what the market wants to hear," said portfolio manager Daniel Morgan from asset manager Synovus. Especially not in view of new AI competitors such as DeepSeek.

DeepSeek challenges old certainties
According to the Chinese start-up of the same name, the development of this artificial intelligence (AI) only cost a fraction of the usual sums. What's more, the program requires less computing power than ChatGPT, Gemini & Co. while offering comparable performance. This raises doubts among investors as to whether the billions invested in new AI data centers will pay off.

The growth of Microsoft and Google's cloud divisions has also disappointed recently. Nevertheless, the major US technology companies are sticking to their expansion plans in unison. Microsoft defended this with the argument that the rise of low-cost AI is accelerating the spread of this technology, leading to increased demand for computing capacity.

Major investments in AI
Amazon plans to invest around 100 billion dollars in infrastructure this year - largely in the expansion of data centers for artificial intelligence. The demand from IT customers for resources for this is so great that the cloud division AWS is experiencing capacity bottlenecks, said Amazon CEO Andy Jassy when presenting the latest quarterly figures.

Last quarter, Amazon invested 26.3 billion dollars (25.3 billion euros) in the expansion of its infrastructure. Jassy held out the prospect that the bottlenecks should ease in the second half of the year with additional chip deliveries and better energy supplies. Software giant Microsoft, which is cooperating with ChatGPT developer OpenAI, also complained last week that it did not have enough capacity to meet the AI needs of its customers.

Amazon forecast consolidated sales of between 151 and 155.5 billion dollars for the current quarter. Analysts had hoped for more than 158 billion dollars. The company pointed out that its forecasts included expected negative exchange rate effects of a good two billion dollars. In addition, there was one more working day in the comparative period due to the leap year, which is estimated to have resulted in an additional turnover of 1.5 billion dollars.