Amazon Ends Year Strong but Faces Uncertain Start to 2025
Amazon wrapped up 2024 on a high note, surpassing Wall Street expectations with its fourth-quarter earnings. The company reported a staggering $187.79 billion in revenue, alongside earnings of $1.86 per share—both exceeding analysts’ predictions of $187.3 billion in revenue and a share price of $1.49. A significant driver of this success was the holiday shopping season, which saw an impressive 8.7% increase in online spending compared to the previous year. According to Adobe Analytics, consumers spent a record $241.1 billion during November and December, marking one of the most successful holiday seasons in Amazon’s history.
Amazon’s CEO, Andy Jassy, credited this strong performance to the company’s customers, selling partners, and employees. However, despite the upbeat earnings report, Amazon’s outlook for the first quarter of 2025 was less optimistic. The company projected sales between $151 billion and $155.5 billion, falling short of analysts’ expectations of $158.5 billion. This forecast led to an initial dip in Amazon’s share price during after-hours trading, though it later rebounded to its previous closing price.
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One major factor weighing on Amazon’s Q1 projections is the unfavorable impact of foreign exchange rates, estimated at around $2.1 billion. Additionally, the absence of an extra Leap Year day, which contributed approximately $1.5 billion in sales in early 2024, will also be a factor in the year-over-year comparison.
Despite the cautious outlook, Amazon continues to focus on innovation, particularly in artificial intelligence. Jassy highlighted the company’s latest AI-driven advancements, including the launch of a new AI chip, Trainium2. While these developments may take time to deliver financial returns, they position Amazon as a strong player in the rapidly evolving AI space.
Amazon’s cost-cutting efforts over the past couple of years have also contributed to its financial stability. Layoffs and restructuring across various departments have helped optimize expenses, which has been well-received by investors. Looking ahead, the company remains committed to expanding its AI and cloud services while navigating economic uncertainties.
As Amazon steps into 2025, the company’s ability to balance cost efficiency, innovation, and market challenges will determine its long-term trajectory. While a strong Q4 has bolstered confidence, the cautious Q1 outlook suggests that Amazon’s journey remains dynamic and unpredictable.
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