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Bezos says Amazon plans to 'double down' on Alexa development

Fourth-quarter earnings hit a new record for Amazon and came in ahead of Wall Street expectations, pushing Amazon's stock up 6 percent.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
3 min read
Amazon CEO Jeff Bezos takes the podium at the Spheres opening day in Seattle on Monday.

Amazon CEO Jeff Bezos takes the podium at the Spheres opening day in Seattle.

Jordan Stead/Amazon

If you think you're hearing Amazon's Alexa voice assistant in too many places, this news will have you reaching for earplugs.

Jeff Bezos , Amazon's founder and CEO, says development of the chatty artificial intelligence promises "much more to come." Bezos made the comments as part of Amazon's better-than-expected fourth-quarter earnings report on Thursday.

"Our 2017 projections for Alexa were very optimistic, and we far exceeded them," Bezos said in a statement. He added that investors should "expect us to double down" on the digital assistant. "We've reached an important point where other companies and developers are accelerating adoption of Alexa."

Bezos' plans to expand Alexa are just one part of the company's aggressive push for growth. In the past few weeks alone, the e-retailer opened a tropical forest/office space in the heart of Seattle, moved into the next stage of its lottery to locate a new headquarters, and shook the health care industry with a new company aimed at improving its employees' health.

Eventually, Amazon will likely stop growing as fast as it is. But that day hasn't arrived just yet. Amazon's fourth-quarter results, its biggest period of the year thanks to holiday sales, make that fact blindingly obvious.

Amazon posted sales of $60.5 billion, up 38 percent, from a year ago. Meanwhile, earnings reached a new record for the company, surging to $1.9 billion, or $3.75 a share, up from $749 million a year earlier. The latest quarter included a $789 million benefit stemming from the new US Tax Cuts and Jobs Act; the company said it was able to remeasure its deferred tax liabilities due to a new lower corporate tax rate.

Analysts had expected $1.85 per share in profit and $59.8 billion in sales, according to Yahoo Finance. Amazon predicted its sales in the first quarter will grow between 34 percent and 42 percent.

During a call with reporters Thursday, Amazon finance chief Brian Olsavsky said the "tens of millions" of Alexa-powered Echo smart speakers sold last year exceeded the company's expectations. Meanwhile, millions of Amazon Prime members have used Alexa for shopping in the past year and the hours people have listened to music using Alexa tripled this past holiday season, he added. The company faces greater competition from Google and Apple , who made their own smart speakers, but Amazon so far remains the market leader.

"The ecosystem of our devices, and frankly other people's devices that are using Alexa, has really grown," Olsavsky said.

A look inside the cashierless Amazon Go store

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The strong financial performance comes as Amazon branches out, seemingly in all directions. The company's optimism was evident earlier this week when it opened a corporate office in downtown Seattle called the Spheres, a glass-encased office space that included an indoor forest.

As it spreads in its hometown, Amazon is also embarking on a public dating game with 20 other North American cities to find a suitable location for its second headquarters, dubbed HQ2. That project is expected to cost over $5 billion and eventually include 50,000 new hires. Major municipalities are involved in a bidding war to land the company.

Perhaps most ambitiously, Amazon said earlier this week that it's teaming up with JPMorgan Chase and Warren Buffett's Berkshire Hathaway to create a new company that will try to curb health care costs for all three organizations' employees. Details on the initiative are thin, but the plan quickly beat up shares of health care companies. 

Oh, forgot to mention that last week Amazon also opened a first-of-its-kind store that does away with cashiers. It's called Amazon Go. For the latest quarter, physical stores posted $4.5 billion in revenue, attributed almost entirely to Whole Foods.

It's still an open question as to whether spending on all these projects will pay off for Amazon, its employees and investors. 

"What is obvious is that Amazon is investing heavily for future growth," said Moody's analyst Charlie O'Shea. "What is far from obvious is where these investments are being made, how much these investments are costing, and when returns will begin to be generated."

So far, Wall Street has ignored many of these questions. Instead it's pushed Amazon shares higher. Shares rose 6.2 percent after hours to $1,476.50.

First published Feb. 1, 1:19 p.m. PT.
Update, 3:26 p.m. PT: Added comments from Amazon's finance chief and additional details.

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