Tech giant Amazon’s (NASDAQ:AMZN) cloud computing arm has missed its revenue expectations, which raises concern about the tech company’s investment in AI.

The company announced on Thursday that its cloud division, Amazon Web Services, reported reported a fourth-quarter revenue of $28.7bn (£23.1bn), which was slightly below Wall Street forecasts of $28.84bn.

Investors were disappointed by this miss. There are concerns about the mass investment Amazon has put into AI infrastructure, particularly after the Chinese startup DeepSeek released its AI chatbot at much lower cost. The launch wiped over $1.2 trillion off tech firms.

Following the release of its results, shares in Amazon dropped 5% to $225.97 in after-hours trading.

Amazon’s disappointing results come amid broader concerns around the cloud computing sector. Google’s parent company, Alphabet (NASDAQ:GOOG) reported a 30% increase in revenue for its cloud unit earlier this week, but still failed to meet market expectations.

Meanwhile Microsoft’s (NASDAQ:MSFT) Azure business also reporter slower Q4 growth.

Despite the shortcomings in its cloud operations, Amazon’s total sales climbed 10% to $187.8bn in the fourth quarter, driven by a robust holiday shopping season. Its retail arm’s online sales rose 7% in the quarter, reaching $75.6bn.

Amazon’s chief executive, Andy Jassy, said: “This was our most successful holiday shopping season just yet, and we’re grateful for the customers, selling partners, and employees who made it possible”.