Amazon almost doubles annual profits, but outlook disappoints the stock market
Amazon's retail business is flourishing, but its cloud business AWS is growing more slowly than the competition. The forecast indicates limited growth overall.
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Amazon earned more than expected in the last three months of the previous year. The Group's sales rose by 10 percent overall, but net profit almost doubled. Net profit for the year as a whole also almost doubled. However, the outlook for the current quarter's results points to a slowdown in growth. This disillusioned investors and the Amazon share price fell slightly.
In the fourth quarter of 2024, Amazon increased its total sales by 10 percent to 187.8 billion US dollars. Market observers had expected 187.3 billion dollars for the Christmas quarter. Sales increased by 10 percent in North America and 8 percent internationally. The cloud business AWS (Amazon Web Services) grew by as much as 19 percent, although this division continues to play a smaller financial role in the Group and is responsible for just 15 percent of total sales.
Although AWS has recently grown more strongly, after Amazon only recorded an increase of 13% in the previous year, the Group's cloud division is lagging behind its competitors in terms of growth. Alphabet was able to increase its business with the Google cloud by 30 percent, and Microsoft even increased its cloud business by 31 percent thanks to its AI business. In contrast, Amazon's cloud growth of 19 percent is downright meager.
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Profits rise faster than sales
Amazon was able to increase its operating profit more significantly in the last quarter of the previous year. This increased by 61% from 13.2 billion dollars in the same period of 2023, when Amazon increased its operating profit fivefold, to 21.2 billion dollars most recently. While operating profit in North America accounts for almost 44 percent of this at 9.3 billion dollars, Amazon was able to turn the operating loss of the international business from previously 400 million dollars into an operating profit of 1.3 billion dollars.
AWS is once again the largest contributor to the operating profit, as Amazon's cloud division increased its operating profit from 7.2 billion dollars in the previous year to 10.6 billion dollars. This alone is an increase of 47 percent, meaning that AWS accounts for half of the Group's operating profit. According to the company statement, Amazon almost doubled its net profit from 10.6 billion dollars at the end of 2023 to 20.0 billion dollars.
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In 2024 as a whole, Amazon was able to increase sales by 11 percent to 638 billion dollars, with business in North America also accounting for the lion's share here at just under 61 percent. Amazon increased its operating profit by 86% to 68.6 billion dollars in 2024. In North America, operating profit increased by almost 68%, and the international business was also turned around in the full year from an operating loss of 2.7 billion dollars in 2023 to an operating profit of 3.8 billion dollars in 2024. AWS operating profit increased by almost 62 percent year-on-year and represents the largest share at 39.8 billion dollars. Net profit for the full year 2024 has almost doubled from 30.4 billion dollars in 2023 to 59.2 billion dollars most recently.
Forecast weaker than expected, share price falls
Despite these overall positive figures, Amazon's growth has slowed somewhat, and this is reflected in the outlook. For the current first quarter of 2025, the Group expects total sales of between 151 and 155.5 billion dollars, which corresponds to year-on-year growth of 5 to 9 percent. If Amazon only hits the lower end of this range, it would be the lowest growth reported by Amazon since 1997 , according to CNBC.
In addition, analysts had expected higher sales of 158.5 billion dollars for the current quarter, causing investors to react with disappointment. Amazon's share price had risen by 44 percent over the course of 2024 and had also risen by a further 9 percent since the beginning of this year. In after-hours trading, however, Amazon's share price went in the opposite direction, falling by around 4 percent.
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