After earnings dropped, shares in Amazon were down by more than 3% in after hours trading on Wall Street, with the high cost of AI also weighing on investors.

The Seattle-based company saw its net sales rise 10% to US$187.8 billion in the quarter ending Dec 31, compared to US$170 billion in the same period last year.

For the full year 2024, Amazon’s net income jumped to US$59.2 billion from US$30.4 billion in 2023.

Amazon Web Services (AWS), the company’s cloud computing arm, remained a key profit driver with sales increasing 19% year-over-year to US$28.8 billion.

But this too was just below market expectations and matched the similar growth worries that hurt cloud rivals Microsoft and Google in the current earnings season.

The division introduced several new and high-cost artificial intelligence capabilities, including its own family of foundation models called Amazon Nova.

“The holiday shopping season was the most successful yet for Amazon,” said CEO Andy Jassy, highlighting the company’s delivery improvements, with US Prime members receiving over 65% more items same-day or overnight compared to Q4 2023.

The company’s North American segment posted operating income of US$9.3 billion, while the International segment returned to profitability with operating income of US$1.3 billion, compared to a loss in the previous year.

But looking ahead, Amazon expects first-quarter 2025 net sales between US$151.0 billion and US$155.5 billion, representing growth of five to nine percent, which was less than predicted by analysts.

Independent tech analyst Rob Enderle pointed to the trade skirmishes launched by US President Donald Trump against China, a major source of goods for Amazon, as a possible reason for the company’s caution.

“Although we focus on Temu a lot more with Chinese content, a lot of stuff sold on Amazon is also Chinese based,” Enderle said.

“With the tariff uncertainty, Amazon is being much more conservative right now than they otherwise would be regarding its guidance.”