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Amazon had a blowout fourth quarter, with earnings that far exceeded Wall Street and the online giant’s own expectations.

The stellar results sent the company’s market valuation to above $1 trillion in late trading on Thursday.

Amazon’s net income increased to $3.3 billion, or $6.47 per diluted share, in the quarter ended Dec. 31, compared with net income of $3.0 billion, or $6.04 per diluted share, in the year-ago period. Analysts had expected earnings of $4.03 per share.

Net sales increased 21% to $87.4 billion, topping Street estimates of $86.02 billion. Net product sales totaled $50.54 billion; net service sales totaled $36.89 billion. 

Revenue from Amazon’s AWS cloud-computing unit, which is under increased competition from Microsoft, rose to a better-than-expected $9.95 billion, ahead of estimates of $9.8 billion. The segment continues to play a crucial role in Amazon’s overall financial performance. The company reported operating income of $3.9 billion in the fourth quarter, with $2.60 billion, or 67%, of the total attributable to AWS. 

“Amazon blew all expectations out of the water during the holiday quarter,” commented Andrew Lipsman, principal analyst, eMarketer. “In Q4, the company continued to gain momentum with e-commerce sales, which was boosted by the rollout of next-day Prime delivery. However, Amazon’s increased profits during this quarter in the face of increased costs and competitive pressure in AWS was the real surprise.”

In a statement, Amazon founder and CEO Jeff Bezos said that more people joined Prime in the fourth quarter than ever before, and that there are now over 150 million paid Prime members around the world. 

“We’ve made Prime delivery faster — the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year,” he said. “Members now have free two-hour grocery delivery from Amazon Fresh and Whole Foods Market in more than 2,000 U.S. cities and towns.”

For the first quarter of 2020, Amazon said it expects net sales are expected to fall between $69 billion and $73 billion, or to grow between 16% and 22% compared with the year-ago period. The guidance anticipates a favorable impact of approximately five basis points from foreign exchange rates.

Operating income is expected to be between $3.0 billion and $4.2 billion, compared with $4.4 billion in first quarter 2019. This guidance includes approximately $800 million lower depreciation expense due to an increase in the estimated useful life of our servers beginning on January 1, 2020.

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