Nasdaq 100: Amazon Stock Drops 4% After Hours Despite Strong Q4 Earnings Beat

Amazon Tops Q4 Estimates but Weak Guidance Weighs on Stock

Amazon.com (NASDAQ: AMZN) delivered strong fourth-quarter results, surpassing Wall Street expectations on both earnings and revenue. The company saw robust holiday sales that drove a 10% year-over-year increase in net sales to $187.8 billion. However, disappointing guidance for the first quarter of 2025 led to a decline in its stock price in extended trading.

How Did Amazon Perform in Q4?

Amazon posted earnings per share (EPS) of $1.86, significantly beating analyst estimates of $1.47. Revenue came in at $187.8 billion, slightly ahead of the expected $187.3 billion. Strong consumer spending during the holiday season bolstered Amazon’s retail segment, while cloud computing revenue from Amazon Web Services (AWS) grew 19% year-over-year to $28.8 billion.

Operating income surged to $21.2 billion, up from $13.2 billion in the same period last year. North America revenue climbed 10% to $115.6 billion, while international sales increased 8% to $43.4 billion. AWS remained a key profit driver, contributing $10.6 billion in operating income.

What’s Behind the Stock Drop?

Despite a strong Q4, Amazon’s stock fell 4.25% in after-hours trading as the company issued weaker-than-expected guidance for the first quarter of 2025. Amazon expects Q1 revenue between $151 billion and $155.5 billion, falling short of analysts’ consensus estimate of $158.3 billion.

The company also projected operating income in the range of $14 billion to $18 billion, compared with $15.3 billion a year ago. Management cited foreign exchange headwinds and the absence of an extra Leap Year day as factors likely to impact growth in the current quarter.

Key Growth Drivers and Challenges

Amazon’s retail segment continued to thrive, with record-breaking Black Friday and Cyber Monday sales. Prime delivery speeds reached new highs, with a 65% increase in same-day or overnight deliveries for U.S. members. The company also maintained its position as the lowest-priced U.S. retailer for the eighth consecutive year.

AWS remains a cornerstone of Amazon’s profitability, with recent innovations like the Trainium2 AI chip and Amazon Nova foundation models positioning the company for further expansion in cloud computing and artificial intelligence. However, increasing competition in the cloud sector and macroeconomic uncertainty could pose challenges.

Market Outlook and What’s Next for Amazon?

Investors will closely monitor Amazon’s ability to sustain consumer demand and navigate potential headwinds in the coming months. The company’s guidance suggests a more tempered growth pace, which could pressure the stock in the near term.

Looking ahead, the focus will be on AWS growth, continued retail innovation, and how Amazon manages cost efficiency in a shifting economic environment. With upcoming earnings calls and macroeconomic indicators influencing investor sentiment, traders will watch for any adjustments in Amazon’s outlook as 2025 progresses.

More Information in our Economic Calendar.