Amazon's Q4 earnings beat analysts' expectations by almost $4bn - on the better side

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Key notes

  • $170 billion (14% YoY), beating estimates of $166.21 billion.

  • AWS revenue of $24.2 billion aligns with forecasts, but margins lag behind Microsoft’s Azure.

  • Holiday sales are robust, with customers buying over 1 billion items on Black Friday and Cyber Monday.

  • Ad revenue rose 27% to $14.65 billion, with Prime Video ads expected to be a major growth driver

Amazon capped off a strong year with a Q4 earnings report that beat analyst expectations. Revenue surged 14% to $170 billion, expected to be around $166.21 billion, driven by robust holiday sales, continued growth in its cloud computing arm, Amazon Web Services (AWS), and a blossoming advertising business.

On the other hand, Amazon’s AWS, the world’s leading cloud provider, saw steady growth with $24.2 billion in revenue. CEO Andy Jassy highlighted the integration of generative AI into many AWS services, which he expects to generate “tens of billions of dollars” in the coming years. However, AWS faces pressure from Microsoft’s Azure cloud service, which boasts higher margins.

Holidays could be the reason. Consumers went on a shopping spree, buying over 1 billion items on Amazon during Black Friday and Cyber Monday. The company’s focus on building fulfillment centers closer to customers is paying off with faster and cheaper deliveries.

Ads helped a lot, and Amazon’s advertising revenue jumped 27% to $14.65 billion, again exceeding expectations. Launching ads on Prime Video is expected to further fuel this growth, with analysts predicting a “healthy” ad business.

I think it’s safe to say that Amazon’s Q4 results were positive, but competition and regulations may impact future growth.

More here.

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