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Amazon shares plunged Thursday after the Internet retail giant posted quarterly earnings that fell short of expectations, even as its key cloud computing business continued to grow rapidly.
The company reported fourth-quarter net income of $1 per share on $35.75 billion in sales. Revenue rose 22 percent from $29.3 billion in the previous year.
Analysts expected Amazon to post quarterly earnings of $1.56 per share on $35.93 billion in revenue, according to a consensus estimate from Thomson Reuters.
Its shares fell as much as 15 percent in choppy after-hours trading. (Click here to track the stock.)
The free-spending Amazon has now posted profit in three straight quarters. Wall Street has watched the company's margins, the pace of growth for its Web Services business and the expansion of its Prime service, among other factors.
Amazon's stock was the top performer in the last year, but has dropped more than 5 percent this year amid widespread selling. It has still climbed more than 100 percent in the last 12 months.
Web Services sales rose to $2.41 billion in the quarter, up 69 percent from the previous year. Analysts expected the segment to post $2.38 billion in revenue, according to a StreetAccount consensus estimate. Operating income for Web Services climbed to $687 million, up 187 percent, as operating margin rose to 28.5 percent.
Net revenue in North America rose to $21.5 billion, up 24 percent from the previous year. The same metric in international markets reached $11.84 billion, up 12 percent. Amazon said it took a hit of about $1.2 billion from foreign exchange rate changes.
Its operating margin as a percentage of net sales was 3.1 percent, up from 2 percent from the previous year. Operating income rose 88 percent to $1.1 billion.
"I think people want to see Amazon continue to make progress on the margin front, and margins were higher than last year, but I think after two very large beats or three very large beats, people were a little bit too optimistic about margin progress in this quarter, " said Allianz Global Investors senior portfolio manager Walter Price on CNBC's "Squawk on the Street."
Though investors may have been too hopeful about the company's margins this quarter, the long-term outlook continues to be "very good" for Amazon, Price added.
For the full year, net sales jumped 20 percent to $107 billion, while net income climbed to $1.25 per share from a loss of 52 cents per share in 2014. Amazon touted the growth of its Prime program, which saw membership increase 51 percent for the year.
For the current quarter, Amazon expects sales in a range of $26.5 billion to $29 billion. Analysts projected $27.68 billion in sales for the first quarter, according to a StreetAccount consensus estimate.
Amazon sees operating income between $100 million and $700 million, versus a Wall Street estimate for $665 million.
Daniel Kurnos, an analyst at the Benchmark Company, saw the after-hours weakness as a buying opportunity.
"They're just starting to realize capacity in a lot of their warehouses and data centers. As they continue to fill that capacity, ideally they would get some margin expansion into that or at least keep it stable," he said on CNBC's "Closing Bell."
He has a "buy" rating and $700 price target on the stock.