Revenue of AWS, Amazon’s cloud computing business, has increased 19 percent to $107.6 billion in 2024. AWS segment’s Q4 sales also increased 19 percent to $28.8 billion.
Focus on artificial intelligence (AI) is driving Amazon’s cloud computing business. But growth in the business is not significant. Amazon, like its rivals Microsoft and Google, is contending with weaker cloud expansion, even as it ramps up capital expenditures to support artificial intelligence development.
The company’s artificial intelligence ambitions have driven significant spending, with Chief Financial Officer Brian Olsavsky confirming that capital expenditures will remain at a high level, similar to last year’s fourth quarter when Amazon spent $26.3 billion.
AWS, a major driver of Amazon’s profitability, has been constrained by inconsistent supply of computing chips, which has slowed down some of its AI-driven growth opportunities.
CEO Andy Jassy acknowledged that delays from third-party chip suppliers had restricted AWS’s ability to scale at an even faster pace, underscoring the challenges of securing critical hardware amid increasing demand for AI-powered cloud services.
Amazon is making aggressive moves to strengthen its AI capabilities, particularly through AWS. At its annual AWS conference in December, the company unveiled a series of new AI models aimed at attracting business and consumer clients. These models are designed to compete with offerings from Microsoft and Google, which have also been racing to integrate AI into their cloud platforms.
Additionally, Amazon is preparing to launch its generative AI-powered Alexa service, a long-awaited upgrade that has faced delays due to concerns about performance and responsiveness. The release, expected later this month, is intended to enhance Amazon’s AI ecosystem and further integrate AI into its consumer-facing products.
Despite its substantial AI investments, Amazon’s cloud performance has mirrored the slowing growth seen at Microsoft and Google, both of which reported disappointing cloud revenue figures in the fourth quarter, Reuters news report highlighted.
The tech giants, along with Meta, have been pouring billions into AI-related infrastructure, with capital expenditures expected to reach a combined $230 billion in 2025. The increasing costs associated with AI development have raised concerns among investors, as companies navigate the balance between expanding AI capabilities and delivering financial returns.
Amazon’s broader business helped mitigate some of the cloud-related weaknesses, with online sales growing 7 percent to $75.56 billion. Advertising revenue, another critical segment, rose 18 percent to $17.3 billion. The company’s overall fourth-quarter revenue reached $187.8 billion, while net income nearly doubled to $20 billion from $10.6 billion a year earlier.
The AI and cloud business remains central to Amazon’s long-term strategy, but the company faces immediate hurdles in proving that its heavy investments will translate into sustainable growth. With increasing competition, supply chain constraints, and rising costs associated with AI infrastructure, Amazon must navigate these challenges carefully while ensuring that AWS continues to be a dominant force in the cloud computing market.
The upcoming launch of its generative AI Alexa service and ongoing AI developments in AWS will be key indicators of how effectively Amazon can leverage artificial intelligence to drive future growth.
Rajani Baburajan
