The performance of a large-cap technology stock could dramatically be influenced by the impact of foreign exchange fluctuations and significant capital expenditure.
Stocks of Amazon (AMZN), on Friday, experienced a decline of 3% bringing it down to $231.80 premarket trading. This drop followed the release of mixed guidance by the company for the first quarter and its commitment to substantial investments in AI infrastructure slated for 2025.
The Ticker page of Amazon emerged as the most actively traded page as it surpassed that of retail favorite Palantir (PLTR), which has been enjoying a surge after its recent earnings report.
Amazon has projected its first-quarter revenue to fall between $151 billion and $155 billion which is a figure that falls short of expectations of analysts of $158 billion.
This shortfall has been because of an anticipated $2.1 billion impact from currency fluctuations. In a similar manner to Meta (META) and Microsoft (MSFT) during this earnings season, Amazon revealed an impressive capital expenditure forecast.
The company is expected to spend $104 billion this year, significantly exceeding the predictions of analysts that were from $80 billion to $85 billion. Despite the mixed results, the investment community is still optimistic about Amazon for mainly two reasons.
Analysts have highlighted a potential resurgence in sales within the crucial Amazon Web Services cloud segment later this year, which is driven by the aggressive spending strategy of the company.
Jeffrey Wlodarczak, an analyst at Pivotal Research in a communication to clients, noted, “The shares have retreated in response to the guidance and the understanding that 2025 is likely to be a year focused on investment. However, we anticipate that by the latter half of 2025, this substantial capital expenditure combined with the accelerating adoption of AI—which we believe will also boost the transition to cloud services—should lead to a significant rebound in cloud revenue.”
Business Journalist
Subscribe to our newsletter and get top Tech, Gaming & Streaming latest news, updates and amazing offers delivered directly in your inbox.
