Amazon.com Inc., the world’s largest online retailer and a prominent cloud service provider, in its Q4 earnings call outlined a $100 billion capex plan for 2025, primarily focused on AI infrastructure for AWS, while noting that hardware supply constraints are currently limiting AWS’ AI-driven growth until late 2025. The company is making significant strides in robotics implementation, particularly at its Shreveport facility, and has developed about 1,000 AI applications across its operations, from customer service to inventory management. Delivery speed improvements continue to drive growth in everyday essentials and pharmacy business, supported by architectural changes to the company’s inbound network. The company is also reducing its reliance on UPS by shifting to its internal logistics network, while continuing to enhance e-commerce discovery through its AI shopping assistant Rufus.

Amazon.com exceeded earnings expectations with $1.86 per share on revenue of $187.8 billion, up 10% year-over-year and achieved record-breaking operating income of $21.2 billion, up 61%, but gave a conservative Q1 2025 guidance of 5-9% growth. AWS maintained strong performance with 19% growth to $28.8 billion and secured major clients like Intuit, PayPal, Reddit, and Apple, while advertising revenue grew 18% to $17.3 billion. Amazon’s strategic initiatives included significant AI investments, with plans to increase capital expenditures to $100 billion in 2025 for projects like Nova models and Trainium chips, alongside improvements in Prime delivery speeds. However, the company faces ongoing challenges including $900 million in FX headwinds, hardware supply constraints affecting AWS that may persist until late 2025, and depreciation schedule changes expected to impact 2025 operating income by $400 million.

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Financial/Operational Metrics:

• Net Sales: $187.8 billion, up 10% YoY.
• Net Income: $20 billion, up 88% YoY.
• Diluted EPS: $1.86, up 86% YoY.
• Operating Income: $21.2 billion, up 61% YoY.
• Operating Cash Flow (TTM): $115.9 billion, up 36% YoY.
• Advertising Revenue: $17.3 billion, up 18% YoY.

Q1 Outlook:

• Revenue: $151-155.5 billion.
• Operating Income: $14-18 billion.
• FX Headwind: $2.1 billion.

Analyst Crossfire:

• Capex & AI Growth, AWS Growth Constraints (Mark Mahaney – Evercore ISI)? AWS capex is expected to remain high in 2025, primarily driven by AI infrastructure. Expansion is based on strong demand signals, making AI a transformational opportunity similar to cloud and the Internet. AWS is facing supply constraints, including chip availability, power limitations, and component shortages. These factors are restricting even faster growth, but constraints are expected to ease in the second half of 2025 (Andrew R. Jassy – CEO).

• AI Cost Curve & Custom Silicon (Eric Sheridan – Goldman Sachs)? AWS sees decreasing inference costs as a catalyst for AI adoption rather than a profitability risk. Lower per-unit costs typically lead to increased overall spending on technology, as seen in the cloud industry (Andrew R. Jassy – CEO).

• AWS Margins & AI Investment, Logistics Shift (Doug Anmuth – J.P. Morgan)? AWS margins fluctuate due to heavy AI investments, but long-term margins are expected to align with non-AI cloud services. Efficiency improvements in power usage and cost control remain priorities. Amazon has significantly reduced reliance on UPS for deliveries, handling more shipments in-house. UPS walked away from some Amazon volume due to lower margins, but Amazon’s own logistics can manage the shift (Brian Olsavsky – CFO, Andrew R. Jassy – CEO).

• Robotics & Gen AI in Retail (Brian Nowak – Morgan Stanley)? Robotics integration in fulfillment centers is already delivering cost savings, productivity, and safety improvements. The Shreveport facility serves as a testbed for next-gen robotics, with expansion plans for other centers. AI is enhancing customer service, seller tools, inventory forecasting, robotics, and shopping experiences. Key implementations include AI-driven chatbots, product listings automation, and predictive sizing recommendations (Andrew R. Jassy – CEO).

• Delivery Speed & Cost Efficiencies, AI & E-commerce Discovery (John Blackledge – TD Cowen, Michael Morton – MoffettNathanson)? Faster delivery improves customer engagement, especially for essentials and pharmacy services. Ongoing inbound network optimizations are expected to reduce cost-to-serve and improve logistics efficiency in 2025. The AI shopping assistant, Rufus, is enhancing product discovery and customer experience by summarizing reviews, personalizing recommendations, and improving search efficiency. Amazon anticipates wider AI-driven e-commerce funnel changes (Andrew R. Jassy – CEO).

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The post AMZN Q4 Call Highlights: $100B Capex, Logistics Shift, and Supply Constraints! first appeared on AlphaStreet.

Amazon.com Inc., the world’s largest online retailer and a prominent cloud service provider, in its Q4 earnings call outlined a $100 billion capex plan for 2025, primarily focused on AI
The post AMZN Q4 Call Highlights: $100B Capex, Logistics Shift, and Supply Constraints! first appeared on AlphaStreet.