By Deborah Mary Sophia
Feb 5 (Reuters) - The pressure is on Amazon.com to deliver on lofty expectations for cloud computing in its fourth-quarter results on Thursday, after Microsoft and Google's lackluster reports jolted financier faith in Big Tech's billion-dollar investments in AI.
Shares of significant tech companies surged in the past two years on the belief that huge datacenter requires for artificial-intelligence innovations would power financial investment for many years.
But that was before Chinese startup DeepSeek said it had attained AI developments at a portion of the expense, speeding up a selloff in innovation stocks that some state was overdue.
Still, Amazon might be much better located than competitors to profit from cheaper AI, experts say, ura.cc due to its enormous cloud service and lower exposure to expensive large-language models that power apps like ChatGPT.
Amazon Web Services, the world's biggest cloud companies, is anticipated to publish its strongest earnings boost in eight quarters at 19.3%, according to information compiled by LSEG.
But Microsoft and Meta were both required to safeguard their AI spending plans last week, and shares of Google-parent Alphabet dropped 8% on Wednesday after it said it would be investing more on capex than for.
"Microsoft and Google results have actually put a lot more of a microscopic lense on Amazon's cloud growth," said Dave Wagner, portfolio manager at Aptus Capital Advisors, pediascape.science which holds shares in all 3 innovation business.
"But if Amazon can crush it on their cloud numbers, the marketplace's going to absolutely enjoy that report."
The company was the first big cloud company to accept DeepSeek's AI designs last month and has said its capital costs, mainly on AI, would be more than the $75 billion it approximated for 2024.
Slowing growth at Microsoft Azure and Google Cloud, the 2nd- and third-biggest cloud players, has actually sparked some care from experts about AWS' efficiency.
"Microsoft said it was capability constrained, Google said it was capability constrained. More than likely, Amazon is going to say it might have been capacity constrained too and that's why its growth rate isn't quite approximately what the marketplace may have anticipated," said Bob O'Donnell, chief expert at TECHnalysis Research.
Some analysts see the weakness at competitors as a sign that Amazon may have captured up in the AI race through efforts including doubling its investment in Anthropic and offering a wide selection of AI designs on its cloud platform.
"We really think that AWS is regaining share. It had been growing a lot slower than Microsoft Azure and Google Cloud for an amount of time, however our company believe that as Amazon has caught up on its AI offering, it may have less of a deceleration than Azure and Google Cloud," D.A. Davidson analyst Gil Luria said.
The company has maintained a higher appraisal than a few of its rivals, with an existing forward price-to-earnings ratio of nearly 39. Microsoft's forward P/E is 29 and Alphabet's 22.4, according to LSEG information.
RETAIL STRENGTH
The e-commerce giant's outcomes are also likely to gain from a healthy holiday shopping season, after competing retailers such as Target and a multitude of garments business released rosy projections over the previous month.
Amazon's North American sales for the fourth quarter are predicted to increase 9% year-on-year. After a downturn in online sales development previously this year, analysts state Amazon is primed for a rebound in the retail business, which has actually influenced its post-earnings share movements over the past 2 quarters.
Data from Adobe Analytics revealed U.S. consumers spent lavishly online between November and December 2024, investing more than $240 billion, drawn by deep discount rates on whatever from TVs to toys.
The holiday costs development rate of 8.7% nearly doubled from the 4.9% recorded in 2023, the data revealed.
Amazon has also tried to improve shipment times and broadened item merchandise, including its concentrate on grocery, pharmacy and fashion - moves experts state will help move growth.
"Most indicators are that it was a great quarter. There was a good holiday for the customer therefore there's a lot of reason to believe Amazon will have succeeded in that side of business," Luria said.
(Reporting by Deborah Sophia in Bengaluru
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Amazon's Cloud Business Faces Crucial test After Rivals Microsoft,
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