From Nasdaq: 2025-02-06 21:15:25

Amazon reported $187.8 billion in revenue for Q4 2024, up 10% year over year, with $21.2 billion in operating income. The company saw strong unit growth in its stores business, welcoming new brands and offering low everyday prices. Amazon Haul, a new shopping experience, launched successfully in the US. The company continues to prioritize selection, pricing, and delivery speed, with Prime membership continuing to grow. In 2024, Amazon delivered over 9 billion units the same or next day globally. The company remains focused on customer experience improvements and has more planned for 2025. Amazon Prime now offers a wide range of benefits for just $14.99 a month, with perks like free shipping, exclusive shopping events, access to premium programming, and more. The company continues to focus on cost efficiency, reducing global cost to serve per unit while improving speed, safety, and selection. In advertising, Amazon generated $17.3 billion in revenue, growing 18% year over year. AWS saw 19% growth in Q4, with a $115 billion annualized revenue run rate. The company is optimistic about the future of generative AI and has launched Trainium2, a custom AI silicon offering better price performance for customers. Amazon Web Services (AWS) is working on Trainium3, a cluster five times more powerful than their current leading cloud models. SageMaker AI’s HyperPod capability saves up to 40% training time. Amazon Bedrock offers high-performing generative AI models with new features like prompt caching. Amazon Nova models provide lower latency and price than competitors. Amazon Q transforms save time and money for companies migrating applications. AWS signed agreements with companies like Intuit and PayPal. Recent launches include Amazon Aurora SQL, S3 tables, S3 metadata, and the next generation of SageMaker. Worldwide revenue was $187.8 billion, with operating income of $21.2 billion, the largest ever for AWS. In the fourth quarter, Amazon reported strong revenue growth in both the North America and International segments, with operating income increasing significantly year over year in both segments. The company also saw improvements in operating margins and continued to focus on lowering costs through improved productivity in transportation and fulfillment centers. Amazon is investing in areas like same-day delivery, automation, and robotics to further lower costs and improve customer experience. Revenue guidance for Q1 is between $151 billion and $155.5 billion, with expected headwinds from foreign exchange rates and the comping of last year’s leap year impact. Operating income for Q1 is expected to be between $14 billion and $18 billion, with updates to the useful life of fixed assets expected to decrease operating income by approximately $400 million for assets on the balance sheet as of December 31st, 2024. Amazon also completed a useful life study for servers and network equipment, decreasing the useful life for some assets from six years to five years, which is estimated to decrease full year 2025 operating income by approximately $700 million. Amazon reported a Q4 2024 expense of $920 million, impacting operating income by $600 million for 2025. They also extended the useful life of certain equipment, expecting to increase operating income by $900 million in 2025. Annualized capex for 2025 is estimated to be around $100 billion, with a focus on AI for AWS. AWS growth is affected by supply constraints on chips, power, and components, but is still growing at a triple-digit rate. Constraints are expected to ease in the second half of 2025. Amazon CEO Andy Jassy discusses advancements in AI technology and the cost curve in the industry. Jassy highlights DeepSeek’s innovations in training techniques and inference optimizations. He emphasizes the importance of offering multiple model types for generative AI applications. Jassy believes that decreasing the cost of technology components, like inference, will lead to increased total spend in technology. Meanwhile, CFO Brian Olsavsky addresses fluctuating margins in AWS due to heavy investments in AI. He assures that margins will normalize in the long term. Additionally, Olsavsky mentions the partnership with UPS for shipping logistics, despite increased use of Amazon’s own transportation network. Amazon CEO Andy Jassy discusses the integration of robotics into the fulfillment network, highlighting cost savings and productivity improvements. New robotics initiatives in Shreveport show promising results, with plans to expand to other facilities. AI is also being used in various areas of the business for productivity and cost savings. Examples include a chatbot with generative AI, improved forecasting, and AI-infused robotics. These efforts have led to higher customer satisfaction and better regional predictions, showcasing the value of AI in enhancing the retail experience. Amazon is utilizing generative AI for new retail experiences like AI shopping assistants, Amazon Lens, and sizing recommendations. They have over 1,000 generative AI applications in development. The company continues to improve delivery speed, seeing increased customer purchases with faster delivery promises. Prime Air aims to deliver items within an hour for everyday essentials. Amazon has made architectural changes in their inbound network to increase efficiencies and lower costs. In response to potential disruption in the e-commerce discovery process, Amazon plans to enhance their AI assistants and adapt to the evolving retail landscape. Amazon’s virtual assistant Rufus continues to improve the customer experience by providing quick access to product information, customer reviews, and order details. The personalization feature is expected to increase throughout 2025, making it more helpful for customers. The company expects Rufus to be a valuable resource for customers looking for assistance with their purchases. The transcript of the conference call includes insights from executives and analysts, highlighting the growth and potential of Amazon’s services. John Mackey, former CEO of Whole Foods Market, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon.



Read more at Nasdaq: Amazon.com (AMZN) Q4 2024 Earnings Call Transcript