Amazon (AMZN, Financial) just dropped its Q4 earnings, and the numbers are solid—revenue climbed 10% to $187.8 billion, while net income nearly doubled to $20 billion. AWS, its cloud powerhouse, saw a 19% boost in revenue, hitting $28.8 billion. But here's where things get tricky: AWS slightly missed analyst expectations, reigniting concerns about Big Tech's AI spending spree. The cloud battle is heating up, with Microsoft and Google also facing growth bottlenecks. Still, Amazon pulled off a record holiday shopping season, delivering faster than ever and flexing its dominance in e-commerce.
Despite the strong report, investors weren't sold—Amazon's stock slipped 3.9% at 11.28pm, as worries over AI profitability loomed. The core issue? Scaling AI is proving expensive, and rivals like China's DeepSeek are pushing cheaper models, challenging Amazon's high-cost cloud strategy. Some analysts see trouble ahead, questioning whether AWS is hitting capacity limits. Others argue Amazon is pulling ahead in the AI arms race, gaining market share while Microsoft and Google lose steam. Price targets are shifting, with some brokerages raising estimates while others trim expectations.
Looking forward, Amazon expects Q1 2025 revenue between $151 billion and $155.5 billion, up 5%-9% year-over-year. But the real question is whether its AI and cloud bets will start paying off. The company's projected operating income of $14 billion to $18 billion has some investors hesitating, waiting for clearer signs of profitability. If Amazon can convert its AI momentum into real returns, the stock could rebound fast. But for now, Wall Street is watching—and waiting.
