Amazon.com (AMZN) is the worst Dow Jones stock Friday as the world's largest e-commerce company's weak first-quarter guidance offsets a top- and bottom-line fourth-quarter beat.
In the three months ending December 31, Amazon's revenue increased 10% year over year to $187.8 billion. Its earnings per share (EPS) surged 86% from the year-ago period to $1.86.
"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 Amazon CEO Andy Jassy.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results beat analysts' expectations. Wall Street was anticipating revenue of $187.3 billion and earnings of $1.49 per share, according to CNBC.
Amazon also said that revenue from its Amazon Web Services (AWS) cloud segment increased 18.9% to $28.8 billion and advertising revenues were up 18% from year-ago period to $17.3 billion.
Analysts were anticipating AWS revenue of $28.8 billion and advertising revenue of $17.4 billion.
"Probably the biggest number for investors was growth in AWS ... [which grew] right in line with the analysts," says Stephen Callahan, trading behavior specialist at Firstrade. "Compare that to Alphabet (GOOGL) and Microsoft (MSFT), which both saw growth decelerate in their cloud divisions. This means Amazon is winning more AI [artificial intelligence] business than its competitors and has regained the leadership position in AI."
For its first quarter, Amazon said it expects to achieve revenue in the range of $151 billion to $155.5 billion, representing growth of 5% to 9% from the year-ago period. The midpoint of this range, $153.25 billion, came up short of the $158.8 billion in revenue analysts were calling for.
"Amazon's guidance for the first quarter was weaker than expected because it forecast a big forex hit," Callahan adds. "This will be an issue going forward."
Is Amazon stock a buy, sell or hold?
Amazon has put in a strong performance on the price charts over the past 12 months, up 36% vs the S&P 500's 22% return. And Wall Street thinks the Magnificent 7 stock has even more room to run.
According to S&P Global Market Intelligence, the average analyst target price for AMZN stock is $258.03, representing implied upside of more than 12% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Financial services firm Wedbush reiterated its Outperform rating (equivalent to a Buy) and $280 price target on the consumer discretionary stock after the earnings release.
"Amazon reported healthy Q4 results with operating income roughly 11% above consensus," says Wedbush analyst Scott Devitt. He adds that possible catalysts for AMZN in the intermediate term include AI-driven AWS growth, automation gains, Alexa AI commercialization, Project Kuiper monetization and a potential Prime price hike. Amazon most recently raised the price on Prime subscriptions in 2022.
Related Content
-
Pinterest Stock Soars as Revenue, Users Beat ExpectationsPinterest stock is higher Friday after the social media site beat revenue and user expectations for its fourth quarter. Here's what you need to know.
-
Affirm Stock Soars On Surprise Profit, Revenue BeatAffirm stock is sizzling Friday after the BNPL firm handily beat earnings and revenue estimates in its most recent quarter. Here's what you need to know.
-
Pinterest Stock Soars as Revenue, Users Beat Expectations
Pinterest stock is higher Friday after the social media site beat revenue and user expectations for its fourth quarter. Here's what you need to know.
-
Affirm Stock Soars On Surprise Profit, Revenue Beat
Affirm stock is sizzling Friday after the BNPL firm handily beat earnings and revenue estimates in its most recent quarter. Here's what you need to know.
-
Empowering Widows: Five Goals for Financial Security in 2025Tackling these strategies one at a time, whether it's updating estate planning or reassessing investments, can help put you on track for financial stability.
-
Private Credit: Coming Soon to a Portfolio Near YouPrivate credit could be a good source of diversification for sophisticated investors, but beware of the risks.
-
What Is Insurance Good For? Let Us Count the WaysYou might resent having to pay premiums, but when disaster or just a minor fender-bender happens, you'll be happy you have the financial backup.
-
Stock Market Today: Investors Respond to the Usual UncertaintyStocks surged late but the major indexes closed mixed as the search for market leadership continues.
-
Trump's Sovereign Wealth Fund: What Is It And How Does It Work?President Trump signed an executive order that puts in motion plans for a U.S. sovereign wealth fund. Here's what a sovereign wealth fund is and how it works.
-
Honeywell Stock Is at the Bottom Of the Dow After Split NewsHoneywell is the worst Dow Jones stock Thursday as the industrial conglomerate's weak outlook offsets news that it is splitting into three separate companies.
