On February 5th, Amazon.com is under pressure to meet high expectations for cloud computing in its upcoming fourth-quarter results following underwhelming reports from Microsoft and Google, which have caused some uncertainty among investors in the tech sector.
The stock prices of major tech firms soared in recent years based on the belief that the increasing demand for artificial-intelligence technologies would drive investments in the long term. However, the landscape shifted after Chinese startup DeepSeek announced significant AI advancements at a fraction of the cost, leading to a decline in tech stocks that was seen as overdue.
Despite this, analysts believe Amazon is in a favorable position compared to its competitors to take advantage of more cost-effective AI solutions due to its extensive cloud infrastructure and limited reliance on expensive large-language models like those behind apps such as ChatGPT.
With Amazon Web Services being the world's leading cloud services provider, it is anticipated to report a robust 19.3% revenue growth, the highest in eight quarters, according to data from LSEG.
The recent announcements from Microsoft and Google regarding their AI spending plans have intensified the focus on Amazon's cloud growth. Analysts are eager to see if Amazon can outperform expectations in this area, signaling a positive outlook for the company.
By embracing DeepSeek's AI models and increasing its investment in AI-related capital spending, Amazon aims to stay ahead in the AI race and potentially regain market share that it may have lost to competitors like Microsoft Azure and Google Cloud.
As Amazon prepares to disclose its results, market analysts are optimistic about a strong performance driven by a successful holiday shopping season. The company is expected to show a 9% increase in North American sales for the fourth quarter, supported by improvements in delivery times and an expanded product range, particularly in grocery, pharmacy, and fashion sectors.