Amazon stock slipped late Thursday despite fourth-quarter results that beat expectations. The tech giant guided for lower-than-expected sales and operating income for the current quarter, citing currency exchange headwinds.
Amazon said in a news release that it earned $1.86 per share on sales of $187.8 billion. Investors, meanwhile, were expecting earnings of $1.49 per share and revenue of $187.3 billion from the Seattle-based tech behemoth.
But Amazon's forecast of $153.3 billion at the midpoint of its range was below previous analyst projections of $158.6 billion, according to FactSet. Amazon is the latest company to blame a strong dollar for weaker-than-expected revenue guidance. Amazon said in its news release that its Q1 guidance reflects "an unusually large, unfavorable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates."
The company's Q1 guidance for operating income also came in lower than expected, at a midpoint of $16 billion compared with projections of $18.4 billion.
Amazon said it expects operating income of $16 billion for the March quarter, at the midpoint of its range. Analysts were projecting $18.4 billon.
On the stock market today, Amazon stock shed more than 5% to 225.55 in after-hours action. Shares gained 1% to close at 238.83 in regular trading.
Amazon Cloud Growth 'Immaterially Below' Views
RBC Capital analyst Brad Erickson wrote to clients late Thursday that "Amazon's Q4 was solid, with in-line overall revenue and a meaningful EBIT (earnings before interest and taxes) and EPS beat. First-party retail was the main upside driver, which was offset by a slight miss from third-party and advertising and AWS immaterially below Street."
Amazon's closely watched cloud business, Amazon Web Services, collected $28.79 billion in sales, up 19% year over year. That was narrowly below the $28.84 billion analysts were projecting ahead of the report. Amazon's cloud business was brought into even greater focus by investors after rivals Microsoft and Google-parent Alphabet posted lower-than-expected cloud sales growth for their December quarters.
Meanwhile, total operating income for Amazon came in at $21.2 billion. Analysts were looking for roughly $19 billion in operating income for the quarter, according to FactSet.
AWS was Amazon's fastest-growing segment. Advertising sales grew 18% year over year to $17.3 billion. Subscription services, such as Amazon Prime, grew 10% to $11.5 billion. Third-party seller services revenue growth decelerated for a fourth consecutive quarter, coming in at 9% growth to total $47.5 billion. Amazon's online stores segment (e-commerce sales it makes directly) grew sales 7% to $75.6 billion.
Amazon Stock Near Buy Zone
Ahead of the report, MarketSurge shows Amazon stock hovering within a 5% buy range above a 233 entry point from a flat-base pattern, based on its weekly chart.
Amazon stock has gained roughly 8% so far this year after gaining 45% in 2024.
The IBD Stock Checkup tool shows Amazon stock holds a best-possible 99 IBD Composite Rating. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
