Amazon (NASDAQ: AMZN) released mixed q4 fiscal 2024 earnings results to a mixed market reaction on Thursday, February 6, 2025, after markets closed. While revenue and profit exceeded expectations, the giant tech firm reported a rise in CapEx and disappointing guidance that sent the stock plummeting.
Amazon’s Q4 Fiscal 2024 Results
Amazon reported a 10% YoY increase in revenue to $187.79 billion, beating forecasts of $187.30 billion. Meanwhile, net income nearly doubled to $20 billion from the $10.6 billion reported last year for an EPS of $1.86, beating forecasts of $1.49.
Operating income grew to $21.2 billion compared to $13,2 billion, with all segments reporting an increase in operating income. The North America segment had an operating income of $9.3 billion, compared to $6.5 billion the previous year. Its international segment reported an operating income of $1.3 billion compared to $0.4 billion the previous year, while the AWS segment reported an operating income of $10.6 billion compared to $7.2 billion the previous year.
When it came to revenue, Amazon Web Services saw the biggest YoY improvement of 19% to $28.8 billion. The North America segment saw a 10% increase in revenue to $115.6 billion, while the international segment saw an 8% increase in revenue to $43.4 billion. Fourth quarter operating expenses came in at 166.59 billion, a 6.3% YoY increase.
Full Year Highlights
For the full year, revenue came in at $638.0 billion, an 11% YoY increase compared to the $574.8 billion reported in fiscal 2023. The Amazon Web Services segment saw a 19% YoY improvement to $107.6 billion, while operating income came in at $68.6 billion compared to $36.9 billion the previous year.
Full year net income came in at $59.2 billion for an EPS of $5.53 compared to $30.4 billion, and an EPS of $2.90 the previous year.
Amazon ended fiscal 2024 with $115.9 billion in operating cash flow, a 36% YoY improvement, and free cash flow of $38.2 billion, compared to $36.8 billion in the TTM ended December 2023.
Full-year operating expenses came in at 569.34 billion, a 5.8% YoY increase.
Q1 Fiscal 2025 Forecast
For the first quarter of fiscal 2025, Amazon expects revenue of $51 to $155.5 billion, a 5% to 9% YoY increase. It forecast an operating income of $14 billion to $18 billion, compared to $15.3 billion in Q1 fiscal 2024.
The forecast revenue growth would be the slowest on record since AMZN went public in 1997. Additionally, it is below analysts’ estimates of $158.6 billion.
Earnings Call Highlights
During the earnings call, CEO Andrew R. Jassy stated that Amazon had a CapEx of 26.3 billion in the fourth quarter of fiscal 2024. Most of the CaPEx went to AI for Amazon Web Services. He added that in 2025, they expect around $100 billion in CapEx.
According to him, the CapEx is justified since AI represents a “once-in-a-lifetime” opportunity that will have a positive impact on AWS business in the medium to long term.
The CEO also talked about the company Trainium2 AI chips, which offer 30% to 40% better performance than existing GPUs. He noted that the chips were already in use by Anthropic to build their future frontier models.
According to the CEO, they plan to release Project Rainier, a cluster of Trainium2 Ultra servers with thousands of chips. In late 2025, they plan to preview Trainium3 and move on to Trainum4 chips thereafter.
AMZN Market Performance
Following the mixed Q4 and fiscal 2024 results, Amazon shares sank 2.94% in pre-market trading to $231.81 per share as of Friday, February 7, 2025, 7:20 AM EST. Over the past six months, AMZN shares have gained 47.49%, while over the past year, they have gained 41.19%. The stock has outperformed the S&P 500, which is up 16.10% in the past six months and 22.80% in the past 12 months.
Analysts are optimistic about AMZN, giving it a strong buy rating. They forecast an average priceo fo $261.42, which is a 9.46% upside based on Thursday’s closing price. The most optimistic expect a price of $306, while the most pesimitic forecast a priceo of $212.
Is Amazon Still A Buy in 2025?
Amazon has stated it expects a massive CapEx of around $100 billion in 2025. However, the long-term benefits of this spending should pay off. Additionally, the successful launch of Trainium2 AI chips and the planned launch of more advanced chips in the future will ensure AWS independence when it comes to AI hardware. Consequently, AMZN stock could potentially deliver huge wins for its shareholders in the medium and long term.
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