Amazon’s record-breaking holiday season meant a big jump in sales Sales for the e-commerce giant jumped 14% to $170 billion in the fourth quarter of 2023.
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Amazon on Thursday reported better-than-expected revenue and profits for the fourth quarter, driven by strong consumer spending during the holiday shopping season.
The Seattle-based e-commerce company said it earned $170 billion in revenue and $10.6 billion in profits during the last three months of 2023, beating expectations from analysts surveyed by FactSet.
In a statement, Amazon CEO Andy Jassy called it a “record-breaking” holiday shopping season for the company, which saw a 14% growth in revenue compared to the same period in 2022.
Despite challenges posed by increasing credit card debt and delinquencies, along with higher prices and borrowing costs, U.S. consumer spending was up in November and December, following a slip in October after six straight months of gains.
Like other retailers, Amazon aimed to lure holiday shoppers through fast-shipping and discount events, including a prominent sales event for Prime members held in October. The company said its online retail business earned $70.5 billion in revenue during the quarter, a 9% jump compared to $64.53 billion during the same period in 2022.
On a call with reporters on Thursday, Amazon’s Chief Financial Officer Brian Olsavsky said the company is seeing more purchases from Prime members who are being lured by better delivery speeds for online orders. He also said revenue is being driven by fees from third-party sellers and the company’s advertising business, which is poised to grow as the tech giant brings ads to Prime Video.
“There’s a lot of enthusiasm from advertisers,” Olsavsky said while noting customers who don’t want ads to intrude on their streaming experience can pay an additional $2.99 per month to avoid it.
Meanwhile, the company’s cloud computing unit AWS earned $24.2 billion during the last quarter. That represented a 13% jump in revenue compared to the same period in 2022, but its growth has slowed down compared to prior years.
Olsavsky also said he expects AWS to accelerate this year, saying businesses that use the cloud service are cutting costs less than before and are more interested in generative AI products Amazon has rolled out in the past year, like the chatbot Q.
Generative artificial intelligence has been a major area of focus for the company, which initially appeared to be falling behind the AI arms race sparked by San Francisco startup OpenAI’s release of ChatGPT in late 2022. But since then, it has been making investments to capitalize on the surging public and business interest in new AI tools.
Roughly an hour before it released its earnings on Thursday, Amazon announced a new generative AI-powered shopping assistant called Rufus. The company – which has also integrated AI-generated summaries of product reviews into its online shopping site – says Rufus will answer customer questions on products and help them discover new items.
Amazon is also pouring up to $4 billion into an artificial intelligence company called Anthropic, an investment that’s under scrutiny by federal regulators concerned about the relationship tech companies are forging with AI startups.
The company’s sway has long been under scrutiny by regulators in the U.S. and abroad. This week, Amazon and iRobot called off an acquisition deal after receiving pushback from regulators in Europe. The Federal Trade Commission is also suing Amazon over allegations it inflates online prices and overcharges sellers.
Overall, the company reported it earned $30.4 billion in profits last year after losing $2.7 billion in 2022.
To increase profitability and cut down on costs, Amazon laid off roughly 27,000 corporate employees between late 2022 and early last year. The company and subsidiaries, such as the streaming platform Twitch and the audiobook service Audible, also cut thousands of jobs last month.
Amazon’s stock rose as much as 8% in after-hours trading.
Apple snapped out of a yearlong sales funk during its holiday-season quarter, propelled by solid demand for the latest model of its iPhone and still-robust growth in a services division facing legal threats that could undermine its prospects.
The modest revenue growth announced Thursday as part of Apple’s October-December results ended four consecutive quarters of year-over-year sales declines. But the performance still may not be enough to allay recent investor concerns about Apple’s ability to rebuild the momentum that established it as the most valuable U.S. publicly traded company.
After years of holding that mantle, Apple recently ceded the top spot to its long-time rival Microsoft, which has been elevated largely through its early leadership in artificial intelligence technology.
Apple is hoping to shift the narrative back in its favor with Friday’s release of its Vision Pro headset that transports users into a hybrid of physical and digital environments — a combination the company is promoting as “spatial computing.” But the first version of the Vision Pro will cost $3,500 — a lofty price tag analysts expect to constrain demand this year.
“We are optimistic about the future, confident in the long term, and excited as we have ever been,” Apple CEO Tim Cook assured analysts during a Thursday conference call about the latest quarterly results.
Despite recurring worries that Apple may be entering a period of slower growth compared with its track record over the past 20 years, Cupertino, California, is still thriving.
Apple’s revenue for its most recent quarter rose 2% from the same time in the previous year to $119.58 billion. The company earned $33.92 billion, or $2.18 per share, a 13% gain from the same time last year.
As usual, the iPhone accounted for the bulk of Apple’s revenue. Sales of the company’s marquee product totaled $69.7 billion in the past quarter, a 6% increase from the same time in the prior year. Those results include the latest iPhone that came out in late September, including a premium model that includes a special video recording feature designed for playing back on the Vision Pro.
Apple’s services division, which is tied largely to the iPhone, posted an 11% rise in revenue from the previous year to $23.12 billion.
Both the revenue and earnings for the quarter exceeded analysts’ projections, according to FactSet Research.
But Apple issued a lukewarm forecast for the current January-March period that indicated iPhone sales will slip from last year, supporting the thesis that the company is mired in a financial malaise. That helped push down Apple’s stock price by more than 3% in Thursday’s extended trading. If the shares make a similar move during Friday’s regular trading session, Apple’s market value will have fallen nearly $200 billion, or 6%, so far this year.
While it has been consistently generating double-digit revenue growth, Apple’s services division is under legal attack. The results of the legal challenges could siphon away a significant chunk of revenue flowing from a search deal with Google and commissions collected through the iPhone app store when consumers complete digital transactions on the device.
Apple’s agreement to make Google the default search engine on the iPhone and Safari browser — a deal that brings in an estimated $15 billion to $20 billion annually — is the focal point of an antitrust case brought by the U.S. Justice Department that will shift into its final phase in May. Another antitrust case brought by video game maker Epic Games and new regulatory rules in Europe already has forced Apple to revise its commission system in the iPhone app store, although critics say the concessions are illusory and are pledging to push for even more dramatic changes.
The past quarter also pointed to faltering sales in China, a major market for Apple and an area that investors have been fretting about because of that country’s weakening economy and reports that the government there may prohibit its workers from buying iPhones. Apple’s revenue in China dropped 13% from the previous year to $20.82 billion.
Meta Platforms (META.O), opens new tab issued its first dividend days ahead of flagship social network Facebook's 20th anniversary while reporting revenue and profit that beat expectations on robust ad sales in the holiday shopping period.
Shares soared more than 14% after the bell, pushing the company's stock market valuation up by more than $140 billion and extending a long recovery that saw Meta hit record highs in recent weeks for the first time in more than two years.
The after-hours gains alone amounted to more than quintuple the entire value of social media rival Snap Inc (SNAP.N), opens new tab.
Meta, one of the tech sector's original unicorns, said its dividend would be 50 cents per share. It also announced it had authorized an additional $50 billion in share repurchases.
The social media giant is the first of its generation of internet juggernauts to issue a dividend, a milestone for a tech sector that has been dominated by the same handful of companies for well over a decade.
Founded in a college dorm room in 2004, it has grown into the world's biggest social media company, connecting more than 3 billion people and revolutionizing how they discover trends, communicate with their neighbors, and engage with politics.
The company, which owns Instagram and WhatsApp, has also been accused of ignoring a multitude of harms on its path to growth, including violations of user privacy and incitements to violence.
Just a day before announcing results, CEO Mark Zuckerberg was called to testify before the U.S. Senate about child safety online and compelled to apologize to parents of children who had experienced sexual abuse.
"You're never as good as they say when you're up, or as bad as they say when you're down. Just keep building and doing good work over long periods of time," he said on Thursday in a post on another Meta-owned app, Threads.
IMPRESSIVE QUARTER
Shares of Meta have steadily been climbing back this past year from a meltdown in 2022 that wiped out more than three-quarters of their one-time value, buoyed by investor excitement about artificial intelligence.
Its recovery has also been aided by a rebound in user growth and digital ad sales, as well as an austerity drive that saw it shed more than 21,000 employees since late 2022.
Revenue for the fourth quarter rose 25% to $40.1 billion, above the $39.2 billion analysts were expecting, according to LSEG data.
[1/2]Woman holds smartphone with Meta logo in front of a displayed Facebook's new rebrand logo Meta in this illustration picture taken October 28, 2021. REUTERS/Dado Ruvic/Illustration/File Photo Acquire Licensing Rights, opens a new tab
Net income rose more than 200% to $14 billion, or $5.33 per share, exceeding expectations of $4.97 per share, according to LSEG data.
"This was one of the most impressive quarters – intrinsically and vs. expectations," said Evercore ISI analyst Mark Mahaney.
Meta forecast first quarter revenue of $34.5 billion to $37 billion, above Wall Street expectations of $33.8 billion. It said it expects full-year 2024 total expenses to be unchanged at $94 billion to $99 billion.
Those results came after fellow digital ads heavyweight Alphabet (GOOGL.O), opens new tab posted holiday season advertising sales that came in below expectations.
MORE METAVERSE, AI INVESTMENTS
Improvements to the social media business have made investors more tolerant of Meta's undiminished spending, as it pours billions of dollars into "metaverse" technologies and building out its artificial intelligence infrastructure.
On Thursday executives doubled down on aggressive investments in both areas.
The company's metaversee-oriented Reality Labs unit handily beat revenue expectations for the fourth quarter, posting record sales of $1.1 billion from "strong sales" of its Quest device over the holiday season, Zuckerberg told analysts after the report. Investors had been expecting $804 million, according to LSEG data.
Meta said it still expected operating losses for Reality Labs to "increase meaningfully" as it invests more in augmented and virtual reality in 2024.
While interactive and immersive experiences via those technologies remain the ultimate goal, Zuckerberg said the latest version of its Ray-Ban smart glasses, with a built-in AI assistant, has been an early surprise hit with consumers too.
"We thought we would have to build full displays and holograms" before the smart glasses would become mainstream, he said. "And now it's quite possible that ... AI assistants built-in will be the killer app."
Still, though improving, Reality Labs sales remain a tiny 2.7% slice of the company's total revenue.
"Meta ended 2023 on an extremely strong note, with revenue soaring above analyst expectations," said Debra Aho Williamson, an independent tech analyst and former principal analyst at eMarketer.
"The company can talk all it wants to about AI and the metaverse, but it's still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta."
Meta Platforms (META.O), opens new tab and Amazon.com (AMZN.O), opens new tab added a combined $280 billion in stock market value late on Thursday after the Big Tech duo reported quarterly results that impressed investors, while Apple's (AAPL.O), opens new tab value shrank by $70 billion after its results.
Meta's stock surged over 14% to a record high $451 after the bell, elevating its market capitalization by $148 billion to $1.16 trillion after the Facebook owner declared its first-ever dividend.
While dividends are associated with mature, slow-growth companies, Meta delivered a 25% jump in revenue to $40.1 billion for the December quarter, fueled by robust advertising and device sales.
Amazon's stock jumped 8% after the company beat December-quarter revenue expectations on strong growth in online spending during the critical holiday shopping season. That put the online shopping and cloud-computing heavyweight's market capitalization at $1.78 trillion.
Apple's quarterly results beat analysts' expectations, but its sales in China missed estimates and its stock dipped 3.3%. Apple faces tough competition in China, which has worried Wall Street in recent months.
Investor optimism about generative AI drove rallies in the U.S. stock market's most valuable companies last year, with many hitting all-time highs in recent sessions.
Microsoft (MSFT.O), opens new tab in January eclipsing Apple as the world's most valuable company, with investors viewing Apple as lagging in the artificial intelligence race between Wall Street's tech heavyweights.
Asked on an investor call about generative AI, Apple CEO Tim Cook said, "We've got some things that we're incredibly excited about that we'll be talking about later this year."
Microsoft's lead over Apple in stock market value will probably grow over the next five years thanks to its early advantage in AI, 13 analysts consulted last week by Reuters unanimously agreed.
"For Apple to be able to accelerate growth, we would need either a material contribution from new products like the Vision Pro or a generative AI-driven cycle to come through the iPhone 16," D.A. Davidson analyst Gil Luria said following its results.
In its report after the bell, Meta said its 2024 capital expenditures would reach between $30 billion and $37 billion, a $2 billion increase over its previous plan, driven by investments in servers, some of which will be used for AI.
The extended-trade surge in Meta's market capitalization was equivalent to more than five times the entire $26 billion value of smaller social media rival Snap Inc (SNAP.N), opens new tab.
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