• by Laurie Sullivan  @lauriesullivan, February 7, 2025

Amazon’s online advertising business generated $17.29 billion in the fourth quarter of 2024, the company reported on Thursday, with total retail ecommerce profits hitting $20 billion in the holiday shopping period.

"AWS performed best, while third party seller services and advertising were slightly light," Dan Romanoff, senior equity analyst at Morningstar, wrote in a research note published Friday. "The two key segments for long-term growth, AWS and advertising, expanded 19% and 18% year over year, respectively, as reported. Amazon’s advertising growth continues to perform inline with or better than large internet peers, while AWS' growth was strong and like Azure, is capacity constrained, so investment will surge further in 2025."

In addition to a strong holiday shopping quarter, growth was driven by artificial intelligence (AI) products at Amazon Web Services (AWS), as well as Prime Video, where Thursday Night Football averaged 13.7 million viewers, the company said.

On a call with analysts and investors, Amazon CEO Andy Jassy detailed the company’s advertising gains during the past year.

Ads in streaming video across the length of the entire funnel made a major difference in the way the company generates ad revenue.

Jassy said expanding its streaming video for Prime Video Ads has made it easier for advertisers to “do full-funnel advertising” -- from the top of the funnel to drive brand awareness to the mid-funnel for responsive ads to specify certain keyword and audiences, to the bottom of the funnel, where sponsored products help advertisers serve relevant product ads to customers at the point of purchase.

Amazon’s ad business has reached a $69 billion annual run rate, he added.

Its ad-services business includes more than sales of video advertising -- also including display ads and sponsored ads to sellers, vendors, publishers, authors and others. In early 2024, Prime Video enabled advertising by default.

Jassy also talked about AI. He said it may be difficult “for some to fathom a world where virtually every app has generative AI infused in it, but Amazon continues to “believe that this world will mostly be built on top of the cloud with the largest portion of it on AWS.”

AWS now has an annualized revenue run rate of $115 billion, with the company growing support in generative and non-generative AI offerings as “companies turn their attention to newer initiatives, bring more workloads to the cloud, restart or accelerate existing migrations from on-premise to the cloud, and tap into the power of generative AI,” Jassy said.

AWS reported operating income of $10.6 billion -- up $3.5 billion year-over-year.

“We've got about 1,000 different generative AI applications we've either built or in the process of building right now,” Jassy said.