Amazon misses 4Q profit estimates despite better-than expected growth in cloud computing business

Amazon sales surged 14% during the fourth quarter, helped by strong holiday spending and a better-than-expected growth in its prominent cloud computing unit.

But the Seattle-based online behemoth’s shares fell nearly 10% in after-hours trading as its profits came in slightly below analysts’ expectations. Investors also didn’t seem to like Amazon’s announcement Thursday that it was stepping up its capital expenditure to $200 billion this year, up from $125 billion last year, as it sees opportunities in artificial intelligence, robots, semiconductors, and satellites.

Wall Street analysts were expecting spending to rise to around $147 billion this year, according to FactSet.

The results come as Amazon is slashing about 16,000 corporate jobs in the second round of mass layoffs for the e-commerce company in three months. It has said that most of these cuts are part of an effort to reduce the workforce that swelled during the pandemic, not because of artificial intelligence.

Separately, Amazon said it would cut about 5,000 retail workers, according to notices it sent to state workforce agencies in California, Maryland, and Washington, resulting from its decision to close almost all of its Amazon Go and Amazon Fresh stores.

That’s on top of a round of 14,000 job cuts in October, bringing the total to well over 30,000 since Amazon’s CEO Andy Jassy first signaled a push for AI-driven organizational changes.

Analysts are analyzing retailers’ performances for insight into how shoppers spent during the holidays and what’s in store for 2026. They also want to know how the online behemoth is managing cost increases given all the uncertainty around President Donald Trump’s tariffs.

Amazon is also under pressure to shore up confidence that its computing arm Amazon Web Services is just as powerful as Microsoft’s Azure and Google’s Google Cloud platform.

Amazon delivered 24% growth for AWS in the fourth quarter, the fastest in 13 quarters, the company said. That followed 20% growth in the third quarter and a 17.5% increase in the second.

Meta, Apple and other Big Tech firms are expected to ramp up their spending on artificial intelligence this year. After pouring $91 billion into capital expenditures devoted mostly to AI, Alphabet, the parent company of Google, disclosed Wednesday that it expects to double down by spending another $175 billion to $185 billion this year.

Amazon also continues to invest in its speedy fulfillment network, through a combination of robotics, AI technology and more efficient warehousing.

The online retailer said it now delivers groceries in 5,000 U.S. cities and towns. In many of them, customers can get same-day delivery of fresh produce and other perishables. Based on strong customer feedback, it said it plans to expand its same-day delivery to more places this year.

Amazon is also reworking its physical store footprint.

Last week, it said that it was closing almost all of its Amazon Go and Amazon Fresh locations within days as it narrows its focus on food delivery and its grocery chain, Whole Foods Market.

Some of the shuttered stores will be converted into Whole Foods locations, the company said in a blog post last week.

Amazon reported net income of $21.2 billion, or $1.95 per share, for the three-month period ended Dec. 31. That compares with $20 billion, or $1.86 per share, in the year-ago quarter.

Revenue rose to $213.4 billion in the fourth quarter, compared with $187.8 billion in the year-ago period.

Analysts were expecting $1.97 per share on sales of $211.4 billion, according to analysts polled by FactSet.

Revenue from Amazon Web Services reached $35.6 billion. Analysts were expecting $34.9 billion.

The company said that it expects sales to be between $173.5 billion and $178.5 billion for the first quarter.

Analysts are projecting $175.6 billion.