Amazon, the giant online retailer, recently faced a bump in the road as its stock price dropped after the company shared some disappointing news about its cloud services. On Thursday, they announced that their cloud revenue for the fourth quarter was below what experts were expecting. This news made investors a bit anxious, leading to a decline in Amazon’s stock price during after-hours trading.
Below Expectations for Cloud Revenue
Amazon’s cloud computing branch, known as Amazon Web Services (AWS), reported earnings of $28.79 billion for the fourth quarter. This amount was less than the $28.87 billion that analysts had predicted. The company’s CEO, Andy Jassy, explained that the drop in revenue was partly due to an inconsistent supply of computer chips from third-party companies. This shortage has impacted many technology firms, causing delays and challenges across the industry. Even with this setback, it’s important to note that AWS still showed a growth of 19% compared to the previous year.
Wobbly Forecast for the Upcoming Quarter
The news didn’t stop there. Amazon also shared its sales predictions for the first quarter of 2024, which seemed rather mild. The company guided for revenues between $151 billion to $155.5 billion, while Wall Street analysts expected the total to reach around $158.6 billion. This slower-than-expected forecast raised concerns among investors, leading to a further decline in the stock price.
A Look at the Stock’s Movement
After the announcement, Amazon’s stock fell by 4% in after-hours trading on Thursday. Despite reporting record overall revenue of $187.8 billion for the fourth quarter, the investor sentiment turned sour mainly because the cloud revenue and future sales outlook disappointed many. Even though the earnings per share (EPS) of $1.86 exceeded the projection of $1.49, it wasn’t enough to lift the stock in the eyes of traders.
Key Support Levels to Watch
Technical analysts have been keeping a close eye on Amazon’s stock. Currently, key support levels, which are prices where traders might consider buying to prevent further losses, are identified at around $230, $216, and $200. However, due to the recent news, there are concerns that the stock may test these support levels in the coming days. If the stock rebounds, traders hope to see a price target as high as $290, but much will depend on how the company manages its challenges going forward.
Investor Outlook and Reactions
- Many traders are digesting the mixed signals coming from Amazon’s performance—strong overall revenue but weak cloud revenue and soft guidance.
- Investors are likely to stay cautious, monitoring not just Amazon’s performance but also the broader tech industry facing similar challenges.
- CEO Andy Jassy’s remarks on the supply chain issues will be a point of discussion as more investors consider how external factors are affecting Amazon’s growth.
Looking Ahead
As Amazon moves into the upcoming quarters, it will be vital for the tech giant to navigate these challenges effectively. The company has seen phenomenal growth in the past, but fluctuations like these can show how volatile the market can be. Keeping an eye on AWS developments and supply chain improvements will help investors make informed decisions about the future of Amazon’s stock.
| Metric | Q4 2023 Results | Analyst Expectations |
|---|---|---|
| AWS Revenue | $28.79 billion | $28.87 billion |
| Overall Revenue | $187.8 billion | — |
| Earnings per Share | $1.86 | $1.49 |
| Q1 2024 Revenue Guidance | $151-$155.5 billion | $158.6 billion |
