Analyst(s): Olivier Blanchard
Publication Date: February 10, 2025
Amazon’s Q4 2024 results highlight strong momentum across its key business segments. AWS continues to scale with AI-driven innovation, while Amazon’s retail business benefits from expanded same-day delivery and fulfillment efficiencies. Advertising remains a fast-growing revenue driver, and the company’s focus on automation and logistics optimization continues to enhance profitability.
What is Covered in this Article:
- Amazon’s Q4 2024 financial results and operating performance
- AWS growth, supply constraints, and AI-driven innovation
- Logistics optimizations, same-day delivery expansion, and cost efficiencies
- Advertising growth, Prime Video ad traction, and AI-powered marketing
- Capital expenditures, Q1 2025 guidance, and macroeconomic risks
The News: Amazon (NASDAQ: AMZN) reported revenue of $187.8 billion (on par with consensus), which reflects an increase of 10% year-on-year (YoY). Revenue growth was led by Amazon Web Services (AWS; +19% YoY to $28.8 billion) as enterprises continued to expand their cloud footprints. Meanwhile, sales in the North American segment reached $115.6 billion (+10% YoY), and International segment sales grew by 8% YoY to $43.4 billion. Operating income rose by 61% YoY to a quarterly record high of $21.2 billion, and the corresponding margin expanded to 11.3% from 7.8% in 4Q 2023. Net income increased to $20 billion from $10.6 billion a year ago. Diluted earnings per share (EPS) came at $1.9, compared to $1 in Q3 2023, exceeding expectations by 24.5%.
“We’ve reduced our global cost to serve on a per unit basis for the second year in a row while at the same time increasing speed, improving safety, and adding selection,” said Andy Jassy, CEO of Amazon. “As we look to 2025 and beyond, we see the opportunity to reduce costs again as we further refine inventory placement, grow our same-day delivery network, and accelerate robotics and automation throughout the network.”
Amazon Delivers Strong Q4 FY 2024 with Record Operating Income, AWS Growth
Analyst Take: Amazon closed out Q4 2024 with solid revenue growth and continued investments in AI, cloud infrastructure, and automation. AWS remains the company’s core growth driver, though supply constraints in AI chips and data center capacity have moderated its expansion. At the same time, logistics optimizations and fulfillment improvements have strengthened retail profitability while advertising revenue surged, further cementing Amazon’s diverse, high-margin business model. Despite some near-term headwinds, Amazon’s focus on technology investments, operational efficiencies, and AI innovation positions it well for continued long-term growth.
AWS Growth Faces Supply Constraints, But Expansion Remains Strong
AWS reported a 19% YoY revenue increase, reaching an annualized revenue run rate of $115 billion. However, CEO Andy Jassy noted that AWS’s expansion could have been even stronger if not for ongoing supply constraints. These include shortages of AI chips, power capacity limitations, and bottlenecks in critical server components like motherboards – issues that have also impacted competitors like Alphabet. Jassy expects these constraints to ease in H2 2025, potentially unlocking additional AWS growth.
To offset these limitations, Amazon is ramping up in-house innovation. The company’s latest custom AI chip, Trainium2, is designed to deliver higher efficiency and lower costs for AI workloads. AWS has also deepened its partnership with Anthropic, which will use Trainium2 to power next-generation AI models.
Beyond AI, AWS introduced several major cloud advancements in the quarter: Amazon Aurora DSQL, a new distributed SQL database, promises 4x faster transaction speeds than existing options. Meanwhile, Amazon S3 Tables now integrates fully managed Apache Iceberg, enabling high-performance analytics at scale. These innovations reinforce AWS’s leadership in cloud computing, even as it navigates short-term supply chain pressures.
Logistics Optimization Drives Efficiencies
Amazon’s North America segment revenue grew 10% YoY, while international revenue increased 8% YoY in constant currency, driven by logistics efficiencies and fulfillment network improvements. The same-day delivery network expanded by 60% YoY in FY 2024, now covering 140+ metro areas, significantly reducing transportation costs while accelerating deliveries.
AI-driven inventory placement has also played a crucial role in reducing fulfillment times and last-mile delivery expenses. Amazon’s redesigned U.S. inbound network also improved the percentage of ordered units placed in the optimal warehouse by over 40% YoY, allowing for faster deliveries at lower costs and improved ROI.
Additionally, warehouse automation and robotics have increased throughput and lowered per-unit processing costs. These operational efficiencies have led to a second consecutive year of per-unit cost reduction, with further improvements expected in FY 2025 as Amazon continues to scale its robotics and expands its same-day delivery infrastructure.
Advertising Growth Accelerates, Prime Video Ads Strengthen Revenue Base
Amazon’s advertising segment surged 18% YoY, generating $17.3 billion in Q4 to reach an annualized run rate of $69 billion. While sponsored product ads remain the largest revenue contributor, newer advertising streams – particularly Prime Video ads – are gaining traction. Since launching in early 2024, Prime Video ads have seen encouraging adoption, driven by growing engagement with Amazon’s live sports and entertainment content.
Amazon is also leveraging AI-powered marketing tools like multi-touch attribution and Amazon Marketing Cloud to improve ad targeting and campaign effectiveness. With advertising remaining one of Amazon’s most profitable segments, continued investment in AI-driven ad solutions is expected to further accelerate monetization.
Strategic Investments and Outlook for 2025
Amazon allocated $26.3 billion in capital expenditures (CapEx) in Q4 2024, with the majority directed toward AI-driven projects within AWS. CEO Andy Jassy described this level of spending as “reasonably representative” of the company’s expected CapEx for FY 2025, reinforcing Amazon’s commitment to AI and cloud expansion.
For Q1 2025, Amazon provided revenue guidance of $151 billion to $155.5 billion, slightly below the consensus estimate of $158.6 billion. The lower-than-expected outlook was primarily due to a $2.1 billion foreign exchange headwind and the absence of an extra day in Q1 2025, which had contributed $1.5 billion in Q1 2024 sales. Operating income is projected between $14 billion and $18 billion, compared to the consensus estimate of $18.24 billion. While high AI-related CapEx may weigh on near-term margins, the combination of AI-driven innovation, logistics efficiencies, and advertising momentum supports Amazon’s long-term growth trajectory.
Looking ahead
Despite near-term supply chain constraints and foreign exchange headwinds, Amazon’s strategic investments in AI, cloud computing, and logistics automation reinforce its position as a market leader. AWS remains a critical growth engine, with enterprise cloud migration and generative AI adoption driving continued expansion. In retail, logistics optimization and same-day delivery growth are improving cost efficiencies and enhancing customer experience. Meanwhile, advertising monetization – particularly Prime Video ads – continues to accelerate as a high-margin revenue stream.
While macroeconomic uncertainties such as potential tariffs and regulatory actions from Washington could impact its near-term trajectory, Amazon’s commitment to technological innovation and operational efficiencies provides a strong foundation for sustained long-term growth.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discusses Amazon’s earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.
Read the full press release on the Amazon website.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
Research Director Olivier Blanchard covers edge semiconductors and intelligent AI-capable devices for Futurum. In addition to having co-authored several books about digital transformation and AI with Futurum Group CEO Daniel Newman, Blanchard brings considerable experience demystifying new and emerging technologies, advising clients on how best to future-proof their organizations, and helping maximize the positive impacts of technology disruption while mitigating their potentially negative effects. Follow his extended analysis on X and LinkedIn.
