E-commerce giant Amazon disappointed investors with its sales outlook, causing its stock to drop 3.1% on Wall Street on Thursday.

Amazon reported net profits of $59.25 billion for 2024, a 95% year-over-year increase, but its 2025 sales projections failed to meet expectations. The company, led by Andy Jassy, posted total net sales of $637.96 billion, up 11% from 2023, with growth across its main segments—particularly in cloud computing through Amazon Web Services (AWS).

In a statement, Jassy highlighted “remarkable innovation” across Amazon’s businesses, especially in AWS, where the company introduced its new AI chip, Trainium 2, along with advancements in its generative AI assistant, Amazon Q, designed for enterprises.

Amazon projected lower-than-expected earnings for the current quarter, signaling continued high spending to support AI services.

For the quarter ending in March, operating income is expected to range between $14 billion and $18 billion, below the analyst consensus of $18.2 billion. First-quarter sales are projected to reach $155.5 billion, missing the average estimate of $158.6 billion.

Following the report, Amazon’s stock dropped around 3.5% in after-hours trading after closing at $238.82 in New York. Despite this decline, the stock remains up 8.9% year-to-date, following a 44% surge in 2024.

This week, Alphabet (-0.3%) announced a 2025 capital expenditure outlook that exceeded Wall Street estimates, contributing to a drop in the search giant’s stock price on Wednesday.

Meanwhile, executives from Meta Platforms (+0.6%)—the parent company of Facebook—and software giant Microsoft (+0.3%) have also defended their massive AI investments, arguing that such spending is essential to staying competitive in the race to monetize the technology.