Amazon (AMZN) stock is down 2% after the e-commerce company delivered better-than-expected financial results for the fourth quarter of 2024 but issued disappointing forward guidance.
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The Seattle-based company announced earnings per share (EPS) of $1.86, which was well ahead of the $1.49 consensus expectation of analysts. The profit nearly double from $1 per share a year ago. Revenue of $187.79 billion was also ahead of the $187.30 billion that was forecast on Wall Street. Sales were up 10% from a year earlier.
Among the company’s closely watched business units, Amazon Web Services (AWS) that focuses on cloud computing posted revenue of $28.8 billion, which matched analysts’ estimates. Cloud computing revenue grew 19% during the quarter compared to 13% a year earlier. Advertising sales of $17.3 billion were slightly below forecasts that called for $17.4 billion.
Weak Outlook
Despite the decent Q4 numbers, Amazon offered a weak outlook for the current first quarter of 2025, saying that it expects sales between $151 billion and $155.5 billion. Wall Street had been looking for Q1 2025 revenue of $158.5 billion. The soft guidance was blamed on an “an unusually large, unfavorable impact” from foreign exchange rates.
The U.S. dollar has risen against other currencies since the American election last November, causing headaches for companies such as Amazon that have international operations. Based on Amazon’s forecast, the company only expects revenue growth of 5% to 9% in the current quarter. The low end of that range would mark the slowest growth on record for Amazon, which went public in 1997.
Amazon’s capital expenditures in the final quarter of last year totaled $27.8 billion, up from $14.6 billion a year ago. The company has been plowing billions into data centers and equipment to run its artificial intelligence (AI) products. Amazon CEO Andy Jassy highlighted the company’s AI investments in the earnings news release, including a new set of AI models called “Nova” and its Trainium microchips.
AMZN stock has gained 40% in the past 12 months.
Is AMZN Stock a Buy?
The stock of Amazon has a consensus Strong Buy rating among 40 Wall Street analysts. That rating is based on 39 Buy and one Hold recommendations issued in the last three months. The average price target on AMZN stock of $261.42 implies 9.46% upside from current levels. These ratings could change following the company’s latest financial results.
