Amazon crushed Wall Street expectations in the last quarter, surpassing Walmart in revenues for the first time. Investors, however, were disappointed by the earnings report’s lackluster forward guidance.
The online retail king reported revenues of $187.8 billion, slightly higher than the consensus forecast of $187.3 billion.
Earnings also exceeded expectations, reaching $1.86 per diluted share compared to the market estimate of $1.49 per share.
Growth Amazon’s cloud business—Amazon Web Services (AWS)—came in at 19 percent, roughly in line with the previous quarter’s growth rate. Cloud revenues were $28.79 billion, slightly below market forecasts.
Amazon emphasized its advancements in artificial intelligence (AI) chip technology, new foundation models (DeepSeek and Luma AI) in the Amazon AI ecosystem, and next-generation data analytics and AI services.
The weakness in its cloud unit mirrors comparable trends in Google and Microsoft. This comes as Wall Street is recalculating its hefty artificial intelligence investments over the last three years, and investors have developed a fierce appetite for returns.
A busy holiday shopping season helped lift Amazon’s retail business. Sales ballooned 7 percent in the quarter, rising to $75.56 billion, higher than the projection of $74.55 billion.
The company reported that 65 percent more items were delivered to U.S. Amazon Prime members the same day or overnight compared to the fourth quarter of 2023.
Amazon also highlighted various successes in the retail space, such as launching a new U.S. shopping application and mobile site named Amazon Haul and hosting record-breaking Black Friday Week and Cyber Monday deal events.
Looking ahead to this quarter, Amazon forecasts sales will be between $151 billion and $155.5 billion, below analysts’ expectations of $158.5 billion.
It also highlighted an “unfavorable impact” of $2.1 billion from foreign exchange rates during the current quarter.
“This guidance anticipates an unusually large, unfavorable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates,” the report stated.
The U.S. dollar has strengthened immensely since President Donald Trump’s electoral victory in November.
The U.S. Dollar Index (DXY), a gauge of the greenback against a weighted basket of six currencies, such as the British pound and Japanese yen, has risen 3 percent over the last three months, reaching the highest level in more than two years.
Surpassing Walmart
Of the mega-cap stocks—multinational companies with market values above $200 billion—Amazon has the “most upside” potential” over the next three to five years, says Eric Clark, the portfolio manager at Rational Funds.“It’s a race between Amazon and Walmart to see who has $1 trillion in revenues in a year,” Clark said in a note emailed to The Epoch Times. “For Amazon, all it takes is 9.7 percent annualized revenue growth for five years to reach this milestone.”
For more than a decade, Walmart has been the top revenue generator each quarter, outpacing energy titan ExxonMobil in 2012.
In the latest quarterly earnings report, Amazon kicked Walmart off its throne for the first time.
Amazon Web Services has played an outsized role in the company’s ascent. Since the pandemic, AWS revenues have doubled and now represent nearly one-fifth of total sales.
Walmart’s next earnings report is scheduled for Feb. 20.
Apple and United Health have been members of the elusive $100 billion revenue club. Pharmaceutical juggernauts CVS Health and McKesson have been close to joining the group, reporting $95 billion and $94 billion, respectively, in the last quarter.
Meanwhile, Clark notes that more growth could be ahead. He believes that Amazon shares are cheap compared to its retail, cloud, and artificial intelligence growth prospects.
