E-commerce giant Amazon delivered strong results this quarter, maintaining its focus on core retail strategies: low prices, a broad selection, and fast shipping. These efforts continue to drive customer engagement and loyalty. At the same time, the company’s AWS segment remains a significant growth engine, fuelled by rising demand for cloud services and expanding AI capabilities. Additionally, Amazon is making strategic investments in logistics and AI, positioning itself for long-term growth and market leadership.
| Financial indicators | Q4 2023 (US$ million) | Q4 2024 (US$ million) | Percentage change |
| Revenue | 169,961 | 187,792 | +10.5% |
| North America | 105,514 | 115,586 | +9.5% |
| International | 40,243 | 43,420 | +7.9% |
| AWS | 24,204 | 28,786 | +18.9% |
| Operating income | 13,209 | 21,203 | +60.5% |
| Net income | 10,624 | 20,004 | +88.3% |
| Operating cash flow | 42,465 | 45,636 | +7.5% |
Revenue increased 10.5% year-on-year to US$187.8 billion in Q4 2024, despite foreign exchange losses totalling US$900 million.
In Q4 2024, revenue from North America and the international segment grew at a high single-digit rate year-on-year. Amazon continues to position itself as customers’ go-to e-commerce platform by expanding product selection, maintaining competitive pricing, and accelerating delivery speed. This strategy drove an 11% year-on-year increase in the number of individual products sold globally, outpacing revenue growth.
In 2024, more third-party sellers, including Armani Beauty and Oura Ring, joined the platform. Products sold by third-party sellers accounted for 61% of total sales on the platform, marking a record high. Notably, operating margins in North America and the international segment expanded to 8.0% and 3.0%, respectively, extending an eight-quarter streak of continuous improvement.
Revenue from AWS grew 18.9% year-on-year to US$28.8 billion in Q4 2024. AWS is a massive business, with annual revenue surpassing US$100 billion in 2024. CEO Andy Jassy expressed optimism about AWS’s growth, as more companies continue migrating their workloads from on-premise infrastructure to the cloud.
While AWS remains Amazon’s fastest-growing segment with the highest operating margin, its growth and profitability will fluctuate due to factors such as enterprise adoption timing, capacity adjustments, and technological advancements. Its operating margin improved from 29.6% in Q4 2023 to 36.9% in Q4 2024, driven by an increase in the useful life of its servers, which contributed 200 basis points to margin expansion. As the business scales, Amazon’s overall margin could see further gains.
Capital expenditures totalled US$26.3 billion in Q4 2024 and are expected to remain at similar levels in 2025. The majority of this spending is allocated to AI-driven demand for AWS and investments in technical infrastructure, guided by customer demand signals. Additionally, Amazon will continue investing in its fulfilment network to support future growth, enhance delivery speeds, and optimize operational efficiency.
Revenue in Q1 2025 is expected to range between US$151.0 billion and US$155.5 billion. Key headwinds include foreign exchange impacts totalling approximately US$2.1 billion (or 150 basis points) and the absence of a leap day in 2025.
Following a record Q4 2024, operating income in Q1 2025 is projected to be between US$14 billion and US$18 billion, factoring in a US$400 million negative impact from fixed asset useful life adjustments.
North America and International
Amazon Prime remains a key driver of customer loyalty and spending, with continued growth in memberships contributing to its retail business.
Amazon’s AI assistant, Rufus, helps customers save time by quickly providing key product information and summarizing reviews, enabling more informed purchasing decisions. Rufus is expected to play an increasing role in product discovery and order personalization.
Demonstrating its commitment to offering products at various price points, Amazon launched Amazon Haul in the U.S. during the recent quarter. Amazon Haul caters to budget-conscious shoppers by providing highly affordable products, responding to the rising popularity of ultra-low-cost online marketplaces like Temu and Shein.
Amazon achieved cost reductions in its fulfilment and transportation networks during Q4 2024. This was driven by improved inventory placement, increased units per package, reduced travel distances, and optimization of the last-mile network. The regionalization and redesign of the inbound network contributed to these efficiencies, with a 40% year-over-year improvement in optimal inventory placement ahead of Black Friday. These efforts resulted in a second consecutive year of reduced global per-unit cost to serve, and the company expects further cost reductions in 2025 through continued inventory placement refinement.
Same-day delivery is now available in more than 140 cities and towns, representing an increase of 60% year-on-year in 2024. Globally, more than 9 billion products were delivered on the same or next day.
Advertising
Amazon is experiencing strong growth in advertising, a key contributor to profitability in its North America and international segments. Its enhanced full-funnel advertising and measurement tools help advertisers optimize campaign effectiveness across all stages of the customer journey.
Advertising revenue grew 18.0% year-on-year to US$17.3 billion during the quarter, driven primarily by sponsored products. 2024 also marked the launch of Prime Video ads, unlocking further growth opportunities.
AWS
AWS is advancing its AI capabilities across the entire stack, from custom chips to applications, delivering a comprehensive AI platform. It starts with custom silicon like Trainium, which offers significant price-performance improvements over traditional GPU solutions. This focus on custom silicon enables AWS to provide more cost-effective and efficient AI solutions. Strong customer adoption of these AI services underscores the value and effectiveness of AWS’s approach.
At the middle layer, Amazon Bedrock is rapidly expanding, offering access to a broad range of foundation models while introducing new features that lower costs and reduce latency. Meanwhile, Amazon Q is transforming code, streamlining migration processes, and helping customers save time and resources. These AI-powered applications drive adoption and reinforce AWS’s commitment to delivering practical, high-impact solutions.
While AI is a major growth driver, AWS remains committed to core infrastructure modernization. The company continues to secure significant customer wins and innovate in key areas such as databases, storage, and analytics.
Key analyst questions
According to CFO Brian Olsavsky, Amazon is making long-term AI investments. While margins may fluctuate in the short term, they are expected to align with non-AI business margins over time. An analyst highlighted that AWS’s operating margin has ranged between the mid-20s and high 30s over the past two years.
Amazon is deploying generative AI at scale, with over 1,000 applications in progress to enhance customer shopping, entertainment, and business operations. AI is also driving cost reductions, power savings, and operational efficiencies across the company.
While AWS’s AI business is experiencing triple-digit growth, supply chain constraints—including chip availability, hardware manufacturing delays, power limitations, and component shortages—are hindering even faster expansion. However, Amazon expects these constraints to ease in the second half of 2025, paving the way for accelerated AWS growth.
CEO Andy Jassy envisions AI as a transformative force that will fundamentally reshape nearly every application, with AWS positioned as the primary platform for building this future. While increased capital expenditures precede revenue realization, this investment signals AWS’s long-term growth potential. Amazon views AI as a game-changing opportunity, on par with the cloud and the internet, believing that early investments will yield significant returns for customers and shareholders in the medium to long term. Essentially, the company is investing now to build the infrastructure necessary to capitalize on the AI boom.
Amazon is rapidly integrating leading AI models, such as DeepSeek, into its services due to their advanced training and inference techniques. Through Bedrock and SageMaker, Amazon provides a diverse selection of frontier models, catering to a wide range of customer needs. The company anticipates that declining inference costs, driven by innovations like DeepSeek, will accelerate AI adoption. As AI inference becomes a core technology, it will enable the development of interconnected AI agents, allowing businesses to create new applications.
Historically, declining per-unit technology costs have led to increased overall spending, as companies explore new use cases. Amazon expects this pattern to repeat with AI, benefiting both customers and AWS.
Amazon is increasing capital expenditures in its retail business to enhance delivery speed and reduce costs. Investments include expanding same-day delivery facilities, increasing rural delivery stations, and heavily investing in robotics, automation, and Prime Air. These initiatives have driven higher customer conversion and repeat business, particularly for everyday essentials and pharmacy. Continued inbound network optimization is expected to further reduce costs throughout the year.
Amazon is seeing strong results from its latest robotics deployments, with improvements in speed, productivity, and cost efficiency at its Shreveport facility. The company plans to expand these robotics initiatives to additional new and retrofitted fulfilment centres in the coming periods.
Jassy emphasised that while Amazon and UPS remain partners, the volume of shipments handled by UPS has declined. Amazon made significant investments in its own logistics network, particularly during the pandemic, allowing it to handle a larger share of its own deliveries and reduce reliance on external carriers like UPS.
Jassy described improved productivity and cost savings as ‘the lowest-hanging fruit in AI,’ particularly within Amazon’s retail business. AI has been integrated into customer service and chatbots, leading to higher customer satisfaction. Additionally, Amazon provides third-party sellers with AI-powered tools to enhance selling processes, inventory management, and forecasting.
The fifth perspective
AWS remains a powerful growth engine, driving rapid expansion and significant margin improvements. With its dominant position in the U.S. e-commerce market and growing global presence, Amazon demonstrates strong customer retention and a resilient business model. The company continues to sustain growth and deliver long-term shareholder value.
Beyond its core businesses, Amazon is also investing in emerging technologies such as AI, robotics, and automation, which are expected to enhance efficiency, scalability, and customer experience. Its strategic initiatives, including expanding Prime benefits, optimizing logistics networks, and deepening cloud computing capabilities, position the company for sustained competitive advantage.
