6 Key Takeaways From Amazon’s Q4 2024 Earnings

TradingKeyFeb 7, 2025 7:11 AM

TradingKey - For tech investors, no other company exemplifies sheer size than Amazon.com Inc (NASDAQ: AMZN). The company pulls in over US$150 billion in sales per quarter due to its massive e-commerce business and cloud computing arm.

Amazon reported its Q4 2024 earnings after the bell on Thursday (6 February) and shares fell around 4% in after-hours trading.

Despite delivering a strong fourth-quarter earnings report, beating expectations on both revenue and profits, there were overhangs such as soft guidance and concerns over foreign exchange headwinds.

For tech and growth investors, here are six key takeaways from Amazon’s latest earnings report.

1. Blowout Q4 2024: Profit soars 61%

Amazon reported revenue of US$187.8 billion, marking a 10% year-on-year increase. Operating income surged 61% year-on-year to US$21.2 billion, driven by the company’s aggressive cost-cutting measures and improvements in logistics efficiency.

The e-commerce giant posted a net income of US$10.6 billion, a 48% increase from last year, translating to US$1.86 per share, crushing Wall Street’s estimate of US$1.48. The strong results highlight Amazon’s ability to balance growth with profitability, even as macroeconomic challenges persist.

2. AWS growth remains strong, but challenges loom

Amazon Web Services (AWS), the company's cash cow, saw a 19% year-on-year increase in revenue in Q4 2024, reaching US$28.8 billion during the period. While this growth is impressive, CEO Andy Jassy acknowledged that AWS could be expanding even faster if not for supply chain constraints, including chip shortages and power limitations.

Despite these headwinds, Jassy remains optimistic, emphasising the massive long-term potential of Artificial Intelligence (AI) within AWS. The company is investing heavily in AI chips like Trainium 2, aiming to reduce costs and improve performance.

However, competition from Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc (NASDAQ: GOOGL) remains fierce in the cloud space.

3. Retail resilience: E-Commerce and physical stores deliver

Amazon’s e-commerce business showed resilience despite economic concerns. Online store sales grew 7.1% year-on-year, reaching US$75.56 billion, while physical store sales jumped 8.3% to US$5.58 billion.

The company’s push toward faster delivery speeds is paying off, with Prime members benefiting from an expanded same-day delivery network.

Third-party seller services saw a 9% sales increase, making up 61% of total unit sales – a record high. This trend underscores Amazon’s growing reliance on third-party sellers to drive profitability while reducing inventory risks.

4. Ad business booming: US$69 billion annual run rate

Amazon’s advertising segment continues to be a hidden gem, generating US$17.3 billion in Q4 2024 revenue, an 18% year-on-year increase. The ad business now operates at a US$69 billion annualised revenue run rate, more than doubling its size from just four years ago.

The company is seeing strong growth in streaming ads, particularly on Prime Video, and continues to refine its full-funnel advertising solutions to attract more brands.

5. Guidance disappoints: FX headwinds, slower growth ahead?

Despite the strong Q4 2024 numbers, Amazon’s Q1 2025 guidance left investors uneasy. The company expects revenue between US$151 billion and US$155.5 billion, representing 5% to 9% year-on-year growth, falling short of analysts' average US$158 billion forecast.

Amazon also warned about an “unusually large” foreign exchange impact of approximately US$2.1 billion in Q1 2025, due to the strong US dollar. While operating income is projected between US$14 billion and US$18 billion, the midpoint of that range suggests only a modest improvement from last year.

6. AI, robotics, and faster deliveries: Amazon’s big 2025 bets

Amazon is doubling down on AI, automation, and logistics improvements to drive future growth. The company is expanding its same-day delivery facilities and robotics integration in fulfillment centers to cut costs and boost speed.

Additionally, the AWS AI push is expected to be a game-changer. Jassy believes AI represents “the biggest opportunity since the Internet”, and Amazon is making major investments in AI infrastructure and custom silicon chips to capitalise on this shift.

Long-Term winner with near-term hiccups

Amazon’s Q4 2024 results reinforce its dominance in e-commerce, cloud computing, and digital advertising. While soft guidance and FX risks are weighing on the stock, the company’s long-term fundamentals remain intact.

For long-term investors, Amazon remains a compelling play, with growth opportunities in AI, logistics, and cloud computing. Short-term volatility aside, this e-commerce and cloud giant isn’t slowing down anytime soon.

Disclaimer: The content of this article solely represents the author's personal opinions and does not reflect the official stance of Tradingkey. It should not be considered as investment advice. The article is intended for reference purposes only, and readers should not base any investment decisions solely on its content. Tradingkey bears no responsibility for any trading outcomes resulting from reliance on this article. Furthermore, Tradingkey cannot guarantee the accuracy of the article's content. Before making any investment decisions, it is advisable to consult an independent financial advisor to fully understand the associated risks.