Amazon Stock Falls as Cloud Growth and Sales Forecast Disappoint
Amazon shares fell after the reveal of the latest earnings report, as it revealed less-than-expected growth in the cloud business and a cautious view for the upcoming quarter. The news raised investors’ concerns over Amazon cloud growth amid uncertainty in Big Tech spending.
According to Reuters, Amazon stocks fell by 5% after the release of the fourth quarter report. Amazon Chief Financial Officer Brian Olsavsky said, “I expected the capital expenditure run rate for this year to be roughly the same as last year’s fourth quarter when the company spent $26.3 billion. Amazon has boosted spending to help develop artificial intelligence software.”
Amazon’s first-quarter sales forecast fell below the analysts’ expectations even with the adjustment of $2 billion in last year’s Leap Day. The company predicts that its revenues will be in the range of $151 billion to $155 billion, which is below the estimate of $158 billion.
Amazon Cloud Growth Concerns
New concerns about Amazon cloud growth as the growth of the company’s highly profitable cloud division, Amazon Web Services slows down. Even though the AWS revenue had increased, this time it expanded at a rate much slower than what analysts had expected, creating an impression that companies are curbing their budgets on the clouds.
Amazon has relied for a long time on AWS for driving overall profitability, but cloud growth decline raises concerns about future earnings potential. According to data compiled by LSEG, AWS’ revenue saw a rise of 19% to $28.79 billion and missed the estimate of $28.87 billion by a little bit.
On a conference call, the Chief Executive Officer said, “We could be growing faster, if not for some of the constraints on capacity, and they come in the form of chips from our third-party partners coming a little bit slower than before.”
Amazon First-Quarter Forecast Misses Expectations
Adding to investor worries, Amazon has presented a wary first-quarter forecast, reporting sales and earnings that fall short of estimates on Wall Street. The company gave two main reasons for a skeptical forecast: economic uncertainty and shifting consumer spending patterns.
Jassy said the company is in fact focused on long-term growth, especially in AI-powered cloud services, but said these near-term challenges exist. He reassured investors that AWS remains a critical component of Amazon’s strategy despite the cloud growth concerns.
Daniel Morgan, senior portfolio manager at Synovus Trust said, “After very strong third-quarter numbers, this quarter the growth rates all missed. That’s what the market doesn’t want to hear. This is particularly true after the emergence of new competitors in artificial intelligence such as China’s DeepSeek.”
Amazon Stock Falls
Following the less than expected earnings report and guidance, Amazon stock fell as investors showed concern. Shares fell sharply in after-hours trading as analysts revised their expectations for the company’s near-term performance.
Market experts say that though Amazon’s long-term fundamentals are good, short-term challenges in AWS and Big Tech spending trends could limit upside potential. Though Big Tech have defended their AI investments while some investors believe that AI-driven cloud innovations will eventually grow.
Amazon’s latest earnings report exposes challenges that the company faces amid intensified concerns over Amazon cloud growth. A slower AWS expansion, a conservative Amazon outlook for the first quarter, and uncertainty regarding Big Tech spending generally have all fueled the market’s negative response. As Amazon stock falls, the company needs to navigate this new industry dynamics change to calm investors and maintain long-term growth in its core business areas.
