Amazon Shares Drop as Weak Cloud Growth and Disappointing Forecasts Concern Investors

Amazon (NASDAQ:AMZN) shares fell over 4% in extended trading on Thursday, wiping out nearly $90 billion in market value. The decline followed weaker-than-expected revenue forecasts and sluggish cloud growth in Amazon Web Services (AWS), sparking investor concerns.

The e-commerce giant projected Q1 revenue between $151 billion and $155 billion, missing analyst estimates of $158 billion, even when factoring in a $2 billion impact from last year’s Leap Day. AWS revenue rose 19% to $28.79 billion but still fell short of expectations. CEO Andy Jassy cited supply chain issues, particularly delayed chip deliveries, as a key factor slowing AWS growth.

The results reflect a broader slowdown in cloud computing, echoing similar trends at Microsoft (NASDAQ:MSFT) and Google parent Alphabet (NASDAQ:GOOGL). Investors are becoming impatient with high capital expenditures, particularly in artificial intelligence (AI) infrastructure, which is driving up costs across Big Tech. Amazon CFO Brian Olsavsky confirmed capital spending would remain steady at around $26.3 billion for 2025.

Despite cloud weakness, Amazon's retail division outperformed, with online sales rising 7% to $75.56 billion, surpassing expectations. Advertising revenue climbed 18% to $17.3 billion. Net income nearly doubled to $20 billion, or $1.86 per share, significantly beating forecasts of $1.49 per share.

However, the company’s Q1 operating profit outlook of $14 billion to $18 billion missed the average estimate of $18.35 billion, adding to investor concerns. With AI investments intensifying and new competitors emerging, Amazon faces pressure to maintain growth while managing rising costs.

Amazon continues to bet on AI, with plans to launch an upgraded Alexa AI voice service this month. Still, with cloud rivals like DeepSeek gaining traction, the company's ability to sustain momentum in an increasingly competitive landscape remains uncertain.