Amazon used to get a lot of criticism for struggling to turn a profit. But now? The e-commerce giant just posted an incredible $20 billion in profits in the last three months of 2024—almost double what it made during the same period the previous year.
CEO Andy Jassy isn’t wasting any time. He announced that Amazon plans to invest over $100 billion in 2025, at least 20% more than last year. The main focus? AI infrastructure. Jassy calls it “probably the biggest technology shift since the internet.”
This move keeps Amazon in line with its biggest competitors. Alphabet (Google’s parent company) also plans to spend $75 billion on similar investments next year.
A Business That Keeps Getting More Profitable
Amazon’s profits aren’t just coming from online shopping. Its cloud business, AWS, pulled in $10.6 billion in operating profit in Q4 2024, with an impressive 37% margin. On top of that, Amazon’s booming ad business is taking over more and more of its search results. The company doesn’t reveal exact profit margins for ads, but analysts believe they’re even better than AWS.
Amazon is also keeping costs in check. While revenue grew 11% in 2024, operating expenses only increased by 6%.
Faster, Cheaper, More Profitable
Amazon has also gotten smarter with logistics. By storing products closer to customers, it has cut delivery costs while speeding up shipping times. The result? Higher profits in both its e-commerce and ad businesses, marking eight consecutive quarters of profit growth.
Even with all this success, Amazon’s stock dipped about 4% in after-hours trading. Why? The company’s Q1 2025 guidance was lower than analysts expected. Factors like exchange rate fluctuations and Leap Year timing were blamed, but some speculate that Trump’s new tariffs on Chinese imports (where many Amazon products are made) could also be a concern.
Big Bet on AI
At the end of the day, the real story is Amazon’s massive bet on AI. The company believes AI will become a core part of nearly every business application. AWS isn’t just about cloud services anymore—it has its own AI chips, proprietary AI models, and a marketplace offering access to over 100 different AI models.
Some investors worry that AI development costs are spiraling out of control, but Jassy remains confident. He believes that as AI training and operational costs drop, more businesses will adopt AI solutions—driving even more revenue for Amazon.
For beginner investors, one thing is clear: Amazon isn’t just an e-commerce company. It’s a money-making machine with AI as its future.