In 2012, Walmart ($WMT) surpassed Exxon Mobil ($XOM) to become the S&P 500’s top revenue generator. Perhaps that’s why it was jarring when, only three years later, investors had thrust the market valuation of a much smaller, less profitable, but faster-growing e-commerce firm above the wholesale giant. But with expectations that Amazon ($AMZN) would become a giant in its own right, investors bought in bulk — and they were right.

Amazon, #1: Amazon was able to fly by Walmart’s valuation, plus those of many other firms, thanks to its tech-flavored valuation. But on Thursday, when Amazon reported its fourth-quarter earnings, it finally lived up to the lofty expectations imposed on it. The company reported a record $187.8B in revenue, surpassing Walmart to become the S&P 500’s largest revenue producer. Perhaps a sign of the times, this was made possible by Amazon’s undeniable e-commerce dominance, plus its lesser-known but all-powerful AWS cloud business.

• The majority of Amazon’s revenue came from e-commerce sales in North America ($115.6B, up 10% year-over-year and the international market ($43.4B, up 8%), while a smaller sum came from AWS ($28.8B, up 19%).
• However, in Q4, the fast-growing AWS cloud division saw its operating income rise 47% YoY to $10.6B, making it the most profitable portion of the business.

Fear of Forecast

The milestone performance and the continued strength of its AWS segment helped overshadow foreign exchange headaches from a strengthening dollar, as well as forecasts that have Amazon facing the slowest revenue growth in its 28-year history on Wall Street.

• Amazon forecasts revenue in the current quarter, Q1 2025, will be between $151B and $155.5B — meaning growth between 5% and 9%, its slowest since mid-2022, when it reported 7.2% YoY growth.
• Thankfully, the $700M in “foreign exchange headwinds” that impacted the company’s earnings isn’t expected to be a significant headache, as Amazon generates most of its sales domestically.

Silver lining in AWS: Amazon’s cloud division came up short of analyst expectations because of what CEO Andy Jassy calls “constraints on capacity,” which hampered growth. But with strong demand, Amazon plans to spend $100B on capital expenditures for its AI developments this year, on top of $83B in spending last year, looking to capitalize on what it calls a “once-in-a-lifetime opportunity” in AI. Perhaps all this spending will help it avoid being usurped the same way it took the crown from Walmart — or maybe, as some investors fear, it won’t.