Amazon’s Earnings Surpass Estimates, But Lackluster Forecast Raises Investor Concerns…

"Amazon Beats Earnings Estimates, But Weak Forecast Worries Investors"

Amazon's fourth-quarter earnings exceeded estimates, but its first-quarter revenue outlook fell short due to foreign exchange impacts, causing a 5% stock drop.

Rachel Patel3 hours agoLast Update : 3 hours ago

Amazon's Earnings Top Estimates, Though Its Forecast Underwhelms

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On February 7, 2025, Amazon (AMZN) announced its fourth-quarter earnings, exceeding analysts’ expectations. The e-commerce and cloud services company reported a net sales increase of 10% year-over-year, while its revenue outlook for the first quarter fell short of projections.

6 Key Takeaways

Amazon's fourth-quarter earnings exceeded estimates.
Revenue outlook for Q1 missed projections.
Foreign exchange rates negatively impacted forecast.
Net sales rose 10% year-over-year.
AWS revenue increased 19%, slightly below expectations.
Amazon shares dropped over 5% post-release.

Fast Answer: Amazon reported fourth-quarter earnings of $20 billion, or $1.86 per share, surpassing estimates. However, its first-quarter revenue forecast of $151 billion to $155.5 billion missed the $158.58 billion consensus, impacted by foreign exchange rates.

Amazon’s fourth-quarter earnings report revealed a net income of $20 billion, translating to $1.86 per share, a significant increase from $10.62 billion, or $1 per share, a year prior. The company’s net sales reached $187.8 billion, which exceeded the analyst consensus from Visible Alpha. Amazon Web Services also contributed to the growth, with a revenue increase of 19% to $28.79 billion, although it was slightly below projections.

Looking ahead, Amazon provided a revenue forecast for the first quarter between $151 billion and $155.5 billion, which is below the analyst consensus of $158.58 billion. The company attributed this shortfall to “an unusually large, unfavorable impact” from foreign exchange rates, estimating the effect to be around $2.1 billion. Following the earnings announcement, Amazon’s shares fell over 5% in extended trading, despite a 40% increase over the past year leading up to the announcement.

Investors reacted negatively to the outlook, reflecting concerns about the potential impact of currency fluctuations on future earnings. The company’s strong performance in the fourth quarter, particularly in its cloud services division, highlights its ongoing growth trajectory, but the revenue forecast suggests challenges ahead. As Amazon navigates these economic factors, its ability to maintain growth will be closely monitored by analysts and investors alike.

Notice: Canadian investors should be aware of the potential impact of foreign exchange rates on Amazon’s performance, as fluctuations can affect earnings reported in Canadian dollars.

In summary, while Amazon’s fourth-quarter results were strong, the company’s cautious revenue forecast for the first quarter raises concerns about its future performance amid adverse foreign exchange conditions.