Amazon has sent shockwaves through the tech industry, posting a record-breaking $20 billion in profits during its fourth quarter of 2024 alone. The online retailer’s profit engine is revving up, feeding an enormous cash buffer and allowing CEO Andy Jassy to double down on the company’s investment in artificial intelligence (AI) infrastructure.
In 2025, Amazon plans to spend around $100 billion or more on capital expenses, with the majority of this year’s budget allocated to supporting its AI investments. The tech giant sees AI as a key driver of growth and competition, with Jassy calling it “probably the biggest technology shift and opportunity since the internet.”
Amazon’s cloud computing business, AWS, posted a healthy operating profit margin of 37% in the fourth quarter, while its ad business has helped bolster the company’s bottom line. The tech giant’s strong margins and cost controls have enabled it to grow revenue by 10% year-over-year in the fourth quarter.
However, Amazon’s stock dropped around 4% in after-hours trading following the release of its first-quarter guidance, which came in below analyst estimates on both revenue and profitability. Analysts attributed this to “unusually large” foreign exchange rate impacts and an extra day of sales due to it being a Leap Year.
Despite this, Jassy is bullish on Amazon’s AI infrastructure investments, saying that they will make it easier for companies to infuse all their applications with generative AI. The recent industry craze over DeepSeek’s powerful AI model, R1, has sparked concerns about the high costs of training and running AI models, but Jassy believes that these costs will decrease in the future, leading to an explosion of corporate use cases.
Overall, Amazon’s strong performance is a significant statement from the tech giant, highlighting its commitment to innovation and investment in emerging technologies like AI.
Source: https://fortune.com/2025/02/06/amazon-profits-q4-earnings-ai-aws-capital-expenses