Amazon Exceeds Analyst Predictions, Posts its Highest Q4 Profits Ever

Feb 06

Buoyed by strong holiday sales and the robust performance of its cloud computing division, Amazon exceeded previous expectations set by analysts for its fourth quarter performance. The eCommerce giant posted a staggering $60.5 billion in revenue, surpassing Wall Street estimates which projected its revenues for the period to only reach $59.83 billion.

For the fourth quarter last year, Amazon posted a net profit of $1.9 billion, which is a record for the company. By comparison, the 2017 Q4 profit is more than double its net profit for the same period the previous year.

However, Amazon’s profits got a big boost from a tax benefit. The company received a provisional $789 million boost from a new tax law passed in December.

In addition, the strong performance of its cloud computing business Amazon Web Services (AWS) is also a contributory factor to its record performance. AWS’s $5.11 billion revenue for the same period likewise defied analysts’ expectations, which was only anticipated to reach $4.97 billion.

The biggest factor to Amazon’s stratospheric Q4 performance still comes from holiday shopping especially during the period starting on the Thanksgiving holiday until New Year. Pushed by the holiday shopping rush, Amazon’s sales rose to $60.5 billion or a 38 percent increase from the year-ago level.

According to Amazon CEO Jeff Bezos, the company’s success is, in large part, a result of its AI-powered digital assistant Alexa. In fact, there are indications that Amazon could be investing more in the technology given its initial success.

“Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often—expect us to double down,” Bezos said in a statement.

For its 2017 full year performance, Amazon posted a 31 percent rise in sales with its 2017 full year revenue of $177.9 billion, as compared to its 2016 sales of only $136 billion. However, its operating profit is only $4.1 billion, a 2 percent decrease from the previous year due to reinvestments.

Wall Street still remains overwhelmingly positive on Amazon’s future prospects. Recently, its stock rose by 70 percent which resulted in Jeff Bezos overthrowing Bill Gates as the world’s richest man.

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