Executives told analysts that Amazon would up capital expenditure by 20%, with the majority dedicated to artificial intelligence infrastructure. 

Amazon shares dropped yesterday after the tech giant projected $153.3bn (£123.19bn) in Q1 sales, citing a $2.1bn (£1.69bn) impact from foreign exchange rates. Analysts had expected $158bn (£126.97bn).

The company announced $187.8bn (£150.9bn) in revenue in the final quarter of 2024, a 10% increase on the previous year. Online store sales grew by 7% year-on-year, accounting for $75.6bn (£60.7bn) – or 40.3% of total revenue. This was ahead of analyst expectations. 

Sales in its cloud computing division Amazon Web Services grew by 19% year-on-year.

CFO Brian Olsavsky said that the run rate on capital expenditure was likely to be the same as in Q4 2024, where investment totalled $26.3bn (£21.1bn). Multiplying that by four leads to upwards of $100bn (£80.3bn) and 20% growth in overall investment. Executives told analysts in a call that the vast majority of this would go into developing its AI capabilities.

The period included a record-breaking Black Friday and Cyber Monday. The company also said it saw the highest number of fourth quarter Kindle device sales in over a decade, with a 30% year-over-year increase in sales.

Revenue from North America was $115.6bn (£92.9bn) in the quarter, while international sales were $43.4bn (£34.8bn).

“The holiday shopping season was the most successful yet for Amazon and we appreciate the support of our customers, selling partners, and employees who helped make it so,” said Andy Jassy, president and CEO of Amazon.

“When we look back on this quarter several years from now, I suspect what we’ll most remember is the remarkable innovation delivered across all of our businesses, none more so than in AWS where we introduced our new Trainium2 AI chip, our own foundation models in Amazon Nova, a plethora of new models and features in Amazon Bedrock that give customers flexibility and cost savings, liberating transformations in Amazon Q to migrate from old platforms, and the next edition of Amazon SageMaker to pull data, analytics, and AI together more concertedly. These benefits are often realized by customers (and the business) several months down the road, but these are substantial enablers in this emerging technology environment and we’re excited to see what customers build.”

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