Tech Stock Roundup: Amazon’s Weak Guidance, MicroStrategy Rebrand, Alphabet Disappoints

Key Takeaways

• Amazon reported strong results but weak guidance.
• Alphabet earnings missed market expectations, with investors fearing huge AI spending.
• MicroStrategy rebranded as Strategy.

Tech giants are navigating a volatile earnings season, with Amazon, Alphabet, and MicroStrategy making headlines for their financial performance and strategic shifts.

Amazon exceeded fourth-quarter earnings and revenue expectations but issued weak guidance, while Alphabet missed revenue forecasts, prompting a 9% stock drop as investors questioned its aggressive AI spending.

Meanwhile, MicroStrategy rebranded as Strategy, reinforcing its transformation into a Bitcoin-focused entity despite ongoing financial losses.

Amazon Provides Weak Outlook

Amazon beat fourth-quarter earnings and revenue expectations but issued weak guidance, causing shares to drop over 5% in extended trading.

The company reported earnings per share of $1.86, above the expected $1.49, with revenue reaching $187.79 billion, slightly exceeding the $187.30 billion estimate.

AWS revenue matched projections at $28.8 billion, while advertising brought in $17.3 billion, just below the $17.4 billion forecast.

For the first quarter, Amazon expects sales between $151 billion and $155.5 billion, missing analysts’ $158.5 billion estimate due to a $2.1 billion foreign exchange impact. Projected growth of 5%–9% could be its slowest on record.

Despite this, Q4 revenue rose 10% year-over-year, and net income nearly doubled to $20 billion, or $1.86 per share. Cost-cutting efforts, including layoffs, helped boost profitability, with operating margin improving to 11.3%.

AWS revenue grew 19%, though it trailed Microsoft Azure’s 31% and Google Cloud’s 30% growth.

Amazon is ramping up AI and cloud investments, with Q4 capital expenditures at $27.8 billion, nearly doubling from $14.6 billion a year ago.

The company plans to increase spending to $100 billion in 2025, up from about $83 billion in 2024, mainly for AWS and AI expansion, including its Nova models and Trainium chips.

Alphabet Earnings Miss Expectations

Alphabet’s fourth-quarter revenue missed expectations, sending shares down 9% as investors reacted to its $75 billion AI-driven capital spending, far above the expected $57.9 billion.

Analysts warn that AI rivals like ChatGPT and Microsoft Copilot threaten Google’s dominance amid growing competition and regulatory pressure.

The company reported $81.6 billion in revenue, below the $82.8 billion estimate , though net income of $2.15 per share slightly beat forecasts.

Search advertising generated $54 billion, exceeding expectations, while YouTube brought in $10.5 billion, driven by increased ad spending during the U.S. election.

However, its Other Bets unit, including Waymo and Verily, fell short at $400 million versus the expected $592 million.

Waymo now averages 150,000 weekly trips and is expanding internationally with a Tokyo test. CEO Sundar Pichai highlighted ongoing efforts to reduce self-driving hardware costs.

Despite concerns, Pichai defended Alphabet’s AI investments, calling them essential for future growth. However, analysts worry that massive spending may not yield sufficient returns, especially as AI development costs decline.

Some fear Alphabet is overinvesting while rivals, like DeepSeek, are proving AI advancements can be achieved more efficiently.

MicroStrategy Rebrand

MicroStrategy has rebranded as Strategy , evolving from a software company to a Bitcoin powerhouse.

Announced ahead of its earnings call, the change reflects ambitions beyond Bitcoin accumulation, potentially positioning the company as a Bitcoin-native financial entity.

The rebrand includes a new logo, an orange color scheme reminiscent of Bitcoin, and a stylized “₿.” Its software division is now StrategySoftware and a merchandise store has launched under the new branding.

Some analysts view this as a step toward becoming a Bitcoin-centric financial institution. Strategy is leveraging its massive BTC holdings and debt-financed acquisitions to offer Bitcoin-based financial products or services.

The company describes itself as a publicly traded entity using equity and debt financing to accumulate Bitcoin and advocate for its role as digital capital.

However, the company’s Bitcoin bet remains risky. The fourth quarter of 2024 results showed a 74.3% yield on BTC holdings but also a $1 billion impairment loss, leading to a $670.8 million net loss—its fourth consecutive quarterly loss.

Despite this, Strategy remains committed, aiming for a $10 billion Bitcoin gain in 2025.