Amazon fourth-quarter cloud revenue falls just shy of Wall Street estimates

Amazon said Thursday that revenue growth from its cloud-computing business slowed slightly to just under 19% year over year in the fourth quarter, barely missing analysts’ estimates.

The company said in a statement that Amazon Web Services generated $28.79 billion in revenue. Analysts polled by StreetAccount had expected $28.84 billion. AWS growth in the third quarter was just above 19%.

AWS remains larger than any other cloud infrastructure provider, ahead of Microsoft and Google. Its two closest peers also missed expectations on cloud revenue for the fourth quarter.

Amazon now gets 15% of total revenue from AWS. The division remains a key provider of cash for the company, supplying just over half of its profit. AWS operating income totaled $10.63 billion, up 48% and above StreetAccount’s $10.45 billion consensus.

During the quarter, AWS’ leader, Matt Garman, told CNBC that Apple has used Amazon’s custom chips to run artificial intelligence models and experimented with next-generation Amazon AI training processors.

At its annual Reinvent conference in Las Vegas in December, AWS announced a “Buy with AWS” button that software companies can add to their websites for simpler purchasing.

“AWS is a reasonably large business by most folks standards, and though we expect growth will be lumpy over the next few years as enterprise adoption cycles, capacity considerations, and technology advancements impact timing, it’s hard to overstate how optimistic we are about what lies ahead for AWS customers and business,” Andy Jassy, Amazon’s CEO and the original head of AWS, said on a conference call with analysts.

Still, AWS could be growing faster if not for shortages in motherboards, power and processors.

“They come in the form of, you know, I would say chips from our third-party partners coming a little bit slower than before with a lot of midstream changes that take a little bit of time to get the hardware actually yielding the percentage of healthy and high-quality servers we expect,” Jassy said.

He foresees an end to the shortages in the second half of 2025.

Fourth-quarter capital investments, including cash capital expenditures, exceeded $26 billion, and the annualized run rate should roughly work out to capital investment for all of 2025, Jassy said. Most of the spending is for AI in AWS, he said.

In January, Amazon started lowering the useful life for some servers and networking equipment to five years from six years because of faster pace in artificial intelligence development. The accounting change should lower 2025 operating income by $700 million, Amazon’s finance chief, Brian Olsavsky, said.

WATCH: Watch CNBC’s full interview with AWS VP of Infrastructure Prasad Kalyanaraman