Amazon's financial results for the fourth quarter of 2024 – record numbers with an uncertain future

Amazon has published its financial results for the fourth quarter of 2024
The results turned out to be better than analysts' expectations. Revenues increased by 10% to $187.8 billion, and net profit reached $20 billion. Despite these impressive results, forecasts for the next quarter are more cautious, causing concern in the market and a drop in the giant's stock by over 3% in after-hours trading.

What are the reasons for this success?

• Strong sales in North America – this segment generated $115.6 billion, marking a 10% year-on-year increase.

• International sector in the black – sales rose by 8% to $43.4 billion.

• AWS drives growth – Amazon Web Services reported a 19% increase in revenue, reaching $28.8 billion.

• Better profitability – operating profit amounted to $21.2 billion, which is a significant jump compared to $13.2 billion in the fourth quarter of 2023.

• Advertising segment remains strong – advertising brought the company $17.3 billion in revenue.

Growth in key business segments

Retail: steady growth across all markets
The retail segment continues to generate the largest share of Amazon’s revenues. In Q4 2024, revenues from North America increased by 10%, reaching $115.6 billion, while international sales rose by 8% to $43.4 billion. When accounting for currency fluctuations, the growth was 9%.

Amazon continues to expand thanks to an enhanced shopping experience, efficient logistics, and customer loyalty. The holiday season played a key role in the results – Amazon's CEO, Andy Jassy, emphasized that it was the best shopping season in the company's history.

AWS – the engine driving Amazon's growth
The fastest growth was recorded by the Amazon Web Services (AWS) segment. AWS revenues in Q4 were $28.8 billion, representing a 19% year-on-year increase. Even better is the operating profit of AWS, which increased to $10.6 billion (up from $7.2 billion in Q4 2023).

Amazon is aggressively expanding its cloud service portfolio:

• New AI chip Trainium2 – is aimed at reducing the costs of processing artificial intelligence models.

• Amazon Bedrock – an AI platform that enables the building and customization of AI models to meet customer needs.

• Amazon SageMaker – further enhancements in data analysis and AI model management.

These innovations could pay off in the long term, but for now, competition from Microsoft and Google is getting stronger.

Operating income and net profit – historic jump
Amazon's operating profits in Q4 rose to $21.2 billion (up from $13.2 billion a year earlier), indicating improved operational efficiency across every area of the business.

The international segment, which previously generated losses, recorded $1.3 billion in operating profit – a significant improvement compared to a $0.4 billion loss in 2023.

Thanks to cost optimization and better sales management, Amazon doubled its net profit to $20 billion (up from $10.6 billion in Q4 2023). This is the result of both revenue growth and better control over operating expenses.

2024 full-year results
Amazon closed the year 2024 with annual revenues of $638 billion, representing an 11% year-on-year increase. Increases were recorded across all key segments:

• Sales in North America rose by 10% to $387.5 billion.

• International sales increased by 9% (or 10% after currency adjustments) to $142.9 billion.

• AWS recorded a 19% increase, reaching $107.6 billion.

• Amazon's operating profit rose by 86% to $68.6 billion, driven by better management of operating costs and strong demand for cloud services.

• The company also significantly increased cash generation – operating cash flows rose by 36% to $115.9 billion.

Why, despite great results, are Amazon's stocks falling?
Although the numbers are impressive, investors are concerned about the future. Amazon stated that it expects sales in the first quarter of 2025 to be between $151 billion and $155.5 billion, which is a lower forecast than the market's expected $158.5 billion.

The main reasons are:

• Impact of currency exchange rates – the company estimates that losses in this regard will amount to $2.1 billion.

• Slowdown in the cloud – although AWS continues to grow, it has not achieved the results analysts had anticipated.

• Cost pressure – large investments in AI infrastructure and logistics are beginning to weigh on the balance sheet.

Will Amazon maintain its pace in 2025?
Despite great results in Q4, Amazon provided cautious forecasts for Q1 2025, anticipating revenues in the range of $151 billion to $155.5 billion – slightly below market expectations.

The challenges that Amazon will face in 2025 include:

• Cloud competition – rivalry with Microsoft and Google in AI and cloud services.

• Operating costs – pressure to optimize costs and improve delivery efficiency.

• Consumer demand dynamics – changing shopping behaviors and growing customer caution.

On the other hand, Amazon has advantages that could ensure further growth:

• AWS and AI – innovations in the cloud and artificial intelligence.

• Marketplace expansion – an increase in the number of sellers and optimization of logistics.

• New technologies in retail – automation of shopping and warehouse processes.

Summary
Amazon ended 2024 with impressive results, doubling its net profit and achieving solid growth across every area of its business. AWS remains the engine driving the company, and the retail sector – despite market maturity – continues to generate significant revenues.

Will 2025 bring more records or a slowdown? Amazon is already preparing for new challenges and investing in future technologies. One thing is for sure – e-commerce and tech giants cannot afford stagnation.