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Amazon is grappling with pandemic-related costs as cloud computing and investments help boost profits.

The improving economy and the ongoing virus are starting to weigh on Amazon’s retail business, even as its cloud computing business has grown and investments have boosted profits.

The company, whose profit, employee count and share price surged two years ago as Covid forced people to stay at home, said Thursday its fourth-quarter operating profit fell to $3.5 billion, about half of $6.9 billion. dollars she earned in the fourth quarter. 2020.

“As expected, we saw higher costs over the holidays driven by labor shortages and inflationary pressures, and these challenges persisted in the first quarter due to omicrons,” Amazon chief executive Andy Jassi said in a statement.

Net income, however, rose sharply due to what Amazon called “pre-tax gains” in Rivian Automotive, an Amazon investment that went public in the fourth quarter. Amazon owns about 20% of the electric car maker.

This increased net income to $14.3 billion from $7.2 billion a year ago. Without Rivian, net income would have dropped to $2.5 billion, the company said. Revenue rose to a record $137.4 billion, only slightly below analysts’ expectations.

Amazon controls about 40 percent of the e-commerce market, but that business—the one it started with and is still known for—is becoming an increasingly weak part of the company. Online retail sales in the fourth quarter of 2020 remained virtually unchanged.

“There is no doubt that growth is slowing,” said Tom Johnson, global chief digital officer for Mindshare Worldwide. “Comparisons to the high-growth quarters at the start of the pandemic, supply chain issues that have an indirect impact on advertising spending, and continued incremental spending all suggest that the period of accelerated growth is over.”

AWS, Amazon’s cloud arm, posted its usually impressive performance, with operating income up 49 percent. Advertising revenue was $9 billion, up 37 percent. Twitter, which derives the vast majority of its revenue from advertising, has less than $5 billion in annual sales by comparison.

To offset the increased costs, Amazon said it is raising the annual price of its Prime Shipping Club from $119 to $139. The company said the 17 percent increase was the first increase in Prime since 2018.

During normal trading on Thursday, as investors fretted about what was to come, Amazon shares fell 8 percent. But after the earnings report came out, investors focused on the good news, quickly pushing Amazon stock up about 17 percent after hours before starting to fall.

Andrew Lipsman, chief analyst at research firm Insider Intelligence, attributed Wall Street’s optimism to two reasons.

“There has been an increase in the price of Prime membership and the continued acceleration of AWS growth and its growing impact on bottom line,” he said. “Perhaps there is also some forgiveness for the e-commerce slowdown, given last year’s extremely difficult comparisons to Q4 2020.”

During the quarter, Amazon added 140,000 employees, bringing the total to 1.6 million employees. This is up 24 percent for the year. Walmart, the largest non-state employer in the US, employs 2.2 million people.

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