• by Sarah Mahoney  @mahoney_sarah, February 8, 2025

Amazon’s fourth-quarter financial report beat expectations, with sales climbing 10% to $187.8 billion, which likely means company revenues will top Walmart’s for the first time. Advertising sales continue to grow, rising 18% to $17.29 billion. Net income jumped 89% to $20 billion, compared to $10.6 billion in the year-ago quarter.

That’s all good news for Amazon. Yet investors focused on the company’s tepid forecast for the months ahead, calling for sales between $151 billion and $155.5 billion, which would mean a growth rate of 5% to 9%. The company attributed the lower numbers to the expected impact of foreign currency rates.

That range is well below industry expectations. “Still, we expect some conservatism embedded in management's outlook,” writes Scott Devitt, an analyst who follows the company for Wedbush. “The company has outperformed the high end of its operating income guidance in the last eight quarters.”

Walmart reports quarterly results later this month, and analysts anticipate that the retailer’s sales will reach $180 billion, below Amazon’s $187 billion.

In addition to Amazon's dethroning Walmart, “this is also the most operating income the company has ever generated in a quarter with the highest retail margins we’ve ever seen,” writes Mark Shmulik, who follows the company for Bernstein.

Andy Jassy, Amazon president and CEO, used the forecast-beating results as an occasion to call out some of the company’s successes, including a record-breaking Black Friday Week and Cyber Monday deal event.

“The holiday shopping season was the most successful yet for Amazon,” he said in the announcement, including 50 million worldwide viewers to “Red One” in the first four days, making it Amazon MGM Studios’ most-watched film debut ever on Prime Video. The company also notched an 11% gain in "Thursday Night Football" viewers, compared to the prior year.

In a call webcast for investors, Jassy said sponsored products, the largest portion of ad revenue, “are doing well, and we see the runway for even more growth. We also have a number of newer streaming offerings that are starting to become significant new revenue sources. On the streaming video side, we wrapped up our first year of Prime Video ads, and we're quite pleased with the early progress.”

AWS, the company’s cloud computing division, also had a strong quarter, with sales rising 19% to $28.79 billion.

But as the ad division and AWS continue to grow, “the law of large numbers means that growth rates in advertising and AWS are tougher to come by,” notes Shmulik.

The company also outperformed expectations in the physical stores business, with revenues gaining 8% to $5.58 billion. Amazon continues to tinker with its grocery strategy, with new management appointments and retooled expansion plans for Amazon Fresh.

Many experts are concerned that Amazon and ecommerce companies will likely feel the brunt of new tariffs impacting Chinese trade. Morgan Stanley estimates that about 25% of Amazon’s first-party products come from China, making Amazon more vulnerable than other companies.