• Revenue: $187.8 billion, up 10% year-over-year.
• Operating Income: $21.2 billion, up 61% year-over-year.
• Free Cash Flow: $36.2 billion, up $700 million year-over-year.
• North America Revenue Growth: 10% year-over-year.
• International Revenue Growth: 9% year-over-year, excluding foreign exchange impact.
• Advertising Revenue: $17.3 billion, up 18% year-over-year.
• AWS Revenue: $28.8 billion, up 19% year-over-year.
• North America Operating Margin: 8%, up 190 basis points year-over-year.
• International Operating Margin: 3%, up 400 basis points year-over-year.
• AWS Operating Income: $10.6 billion, up $3.5 billion year-over-year.
• Capital Investments: $26.3 billion in the fourth quarter.
• Warning! GuruFocus has detected 6 Warning Signs with AMZN.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Amazon.com Inc (NASDAQ:AMZN) reported a 10% year-over-year increase in revenue, reaching $187.8 billion, despite foreign exchange headwinds.
• Operating income rose by 61% year-over-year to $21.2 billion, marking the largest operating income quarter ever for the company.
• Amazon’s advertising revenue grew 18% year-over-year, reaching $17.3 billion, indicating strong growth in this segment.
• AWS achieved a 19% year-over-year growth, with an annualized revenue run rate of $115 billion, showcasing its continued expansion.
• The company has successfully reduced its global cost to serve on a per unit basis for the second consecutive year, while increasing delivery speed and improving safety.
• Foreign exchange rates posed a $900 million headwind in the quarter, impacting revenue growth.
• AWS growth is currently moderated by supply chain constraints, including chip shortages and power limitations.
• The company anticipates a decrease in full-year 2025 operating income by approximately $400 million due to changes in the useful life of certain assets.
• Amazon is facing increased competition in the AI space, with the need to invest heavily in AI infrastructure impacting short-term margins.
• The company is experiencing fluctuations in AWS operating margins, which have varied significantly over the past two years.

Q: Brian, should we think about $100 billion CapEx in 2025? And Andy, is AWS growth currently moderated by supply constraints? A: (Andrew Jassy, CEO) The CapEx spend in Q4 was $26.3 billion, which is representative of the annualized rate for 2025, primarily for AI in AWS. AWS growth is somewhat moderated by supply constraints, including chip availability and power constraints, but we expect these to ease in the second half of 2025.

Q: How do you plan to bend the cost curve lower with AI, considering the recent developments in China? A: (Andrew Jassy, CEO) We are impressed with DeepSeek’s advancements and are working on similar innovations. We believe that as the cost of inference decreases, it will lead to more applications infused with AI, ultimately increasing total technology spend despite lower per-unit costs.

Q: Can you discuss AWS margins given the investment in generative AI and the impact of less volume through UPS? A: (Brian Olsavsky, CFO) AWS margins will fluctuate due to AI investments, but we expect long-term margins to be comparable to non-AI business. Regarding UPS, we’ve increased our logistics capabilities, and while UPS has reduced volume, we can manage with our own network.

Q: What are the learnings from Shreveport regarding robotics, and how will AI change the retail shopping experience in 2025? A: (Andrew Jassy, CEO) Robotics in Shreveport has shown improvements in speed, productivity, and cost. We plan to expand these innovations. AI will enhance productivity and create new experiences, such as improved customer service chatbots and AI-infused shopping assistants.

Q: How is the current speed of delivery impacting the everyday essentials business, and what efficiencies do you expect from the inbound network? A: (Andrew Jassy, CEO) Faster delivery speeds increase customer purchases and usage for everyday essentials. Our new inbound network architecture is expected to yield efficiencies and reduce costs throughout the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.