By Greg Bensinger, Deborah Mary Sophia (Reuters) -Amazon.com investors drove shares down sharply on Thursday due to weakness in the retailer's cloud computing unit and lower-than-expected forecasts for first-quarter revenue and profit.

Key Takeaways Amazon shares lost ground in extended trading on Thursday after the tech giant reported cloud computing revenue below expectations and issued a tepid current quarter outlook.The stock's projected open on Friday sets the stage for a possible retest of a rising wedge pattern's lower trendline.

AWS has not been able to match the growth of Amazon’s competitors, with Microsoft Corp.’s Azure and Alphabet Inc.’s Google Cloud seeing cloud-related revenue rise by 31% and 30%, respectively. Even so, AWS remains much bigger than any other cloud infrastructure provider, and it’s notable that those peers also missed expectations this week.

Amazon.com Inc. shares have largely climbed on the back of two trends: strength in its cloud business and a focus on costs. Now both could be in question.

Amazon spent $26.3 billion in capital expenditures in the last three months of 2024, the vast majority of which went toward AI-related projects within AWS

CEO Jassy said the supply of chips — from third parties and Amazon’s own chip design unit — and power capacity are limiting the ability of Amazon Web Services to bring new data centers online.

The brick-and-mortar mainstay has held the top spot in quarterly sales for more than a decade, according to analysts.

Cloud computing and online retail behemoth Amazon (NASDAQ:AMZN) in Q4 CY2024, with sales up 10.5% year on year to $187.8 billion. On the other hand, next quarter’s revenue guidance of $153.3 billion was less impressive,