Amazon misses fourth quarter profit estimates

Amazon sales rose 14 percent in the fourth quarter, helped by strong holiday spending and better-than-expected growth at its leading cloud computing unit.

But shares of the Seattle-based online giant fell nearly 10 percent in after-hours trading as its profit fell slightly below analysts’ expectations.

Investors also appear to have disliked Amazon’s announcement on Thursday that it would increase capital spending to $US200bn ($A286bn) this year from $US125bn ($A179bn) in 2025 as it sees opportunities in artificial intelligence, robots, semiconductors and satellites.

Wall Street analysts had expected spending to rise to about US$147 billion ($A211 billion) this year, according to FactSet.

The results come as Amazon cuts nearly 16,000 corporate jobs in the second round of mass layoffs for the e-commerce company in three months. It was stated that most of these cuts were not due to artificial intelligence, but were part of the effort to reduce the increasing workforce during the pandemic.

Separately, Amazon said it would lay off nearly 5,000 retail workers due to its decision to close nearly all of its Amazon Go and Amazon Fresh stores, according to notices it sent to state workforce agencies in California, Maryland and Washington.

That’s on top of October’s 14,000 layoffs, bringing the total to more than 30,000 since Amazon CEO Andy Jassy first signaled AI-driven organizational changes.

Analysts are analyzing retailers’ performance to provide insight into how shoppers spent during the holidays and what’s in store in 2026. They also want to know how the online giant is managing cost increases, given all the uncertainty surrounding President Donald Trump’s tariffs.

Amazon is also under pressure to increase confidence that its computing arm, Amazon Web Services, is as powerful as Microsoft’s Azure and Google’s Google Cloud platform.

Amazon delivered 24 percent growth for AWS in the fourth quarter, the fastest in the last 13 quarters, the company said. This was followed by a growth of 20 percent in the third quarter and 17.5 percent in the second quarter.

Meta, Apple and other Big Tech companies are expected to increase their spending on artificial intelligence this year. After spending US$91 billion ($130 billion) on capital expenditures mostly devoted to artificial intelligence, Google parent Alphabet said on Wednesday it expects to double this year by spending between US$175 billion (US$251 billion) and US$185 billion (US$265 billion).

Amazon also continues to invest in its rapid fulfillment network through a combination of robotics, AI technology and more efficient warehousing.

The online retailer said it now delivers groceries in 5,000 U.S. cities and towns. In many, customers can pick up fresh produce and other perishable items the same day. Based on strong customer feedback, it plans to expand same-day delivery to more locations this year, it said.

Amazon is also reworking its physical store footprint.

Last week, it said it would close nearly all Amazon Go and Amazon Fresh locations within days as it narrowed its focus on food delivery and grocery chain Whole Foods Market.

Some of the shuttered stores will be converted into Whole Foods locations, the company said in a blog post last week.

Amazon reported net income of $21.2 billion ($30.4 billion) per share, or $1.95 ($2.79) per share, for the three months ended Dec. 31. This compares with $US20 billion ($29 billion), or $US1.86 ($2.66) per share in the prior-year quarter.

Revenue rose to $213.4 billion ($305.7 billion) in the fourth quarter, compared to $187.8 billion ($269.0 billion) in the same period a year ago.

Analysts had expected sales of $US1.97 ($A2.82) per share for $US211.4 billion ($A302.8 billion), according to analysts polled by FactSet.

Revenue from Amazon Web Services reached US$35.6 billion ($51.0 billion). Analysts were expecting US$34.9 billion (AU$50.0 billion).

The company said it expects sales to be between US$173.5 billion ($248.5 billion) and US$178.5 billion ($255.7 billion) in the first quarter.

Analysts are predicting US$175.6 billion ($A251.5 billion).

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