In the three months to the end of the year, which included the crucial Christmas period, profit rose 63% to $3bn (£2.2bn) while revenue was up 20% to $72.4bn.
Shares of the company fell 1.1 per cent to US$1,700 in trading after the bell. Analysts projected US$71.9 billion.
Advertising is another fast-growing source of revenue for Amazon.
Revenue in North America topped $44 billion, up from $37 billion year-over-year. For the year, net sales were up 31 per cent to US$232.9 billion, compared to $177.9 billion in 2017.
Amazon has paid less corporation tax in the United Kingdom over the last two decades than major retailers such as Marks and Spencer paid in one year alone, it has been reported.
Sales will be US$56 billion to US$60 billion in the current period, compared with analysts' average estimate of US$61 billion.
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"In 2018, we improved Alexa's ability to understand requests and answer questions by more than 20 per cent through advances in machine learning, we added billions of facts making Alexa more knowledgeable than ever, developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017". The cost of stowing, packing and delivering goods increased 12 per cent in the holiday quarter to US$10 billion, in line with online sales growth of 12.5 per cent. A lucrative cloud computing business, as well as fees that merchants pay Amazon to ship and advertise their products, has fattened the company's once-thin profit margin. But first-quarter guidance came in a bit light of estimates.
Additionally, the company's net income increased to $3.0 billion United States dollars (roughly $3.94 billion CAD) in Q4 2018, compared to $1.9 billion USD (roughly $2.49 billion CAD) in Q4 2017. Although its operating loss shrunk to US$642-million from US$919-million in the quarter, rules in India created concern. Its cloud services business grew 45% over the last quarter of 2017.
Amazon shares have risen 14 percent since the beginning of the year, while the Standard & Poor's 500 stock index has increased almost 8 percent and the Nasdaq composite has risen 9.7 percent. Amazon had jumped back above Microsoft Corp., which is No. 2 in cloud computing, as the most valuable publicly traded company, with a market capitalization of US$840.4 billion.
The results were the first to show the impact of Amazon's pay rise.
"In a lot of ways, 2018 was about banking the efficiencies of investments in people, warehouses, infrastructure that we had put in place in 2016 and '17", Olsavsky said. Amazon said the category grew 97 percent in the fourth quarter to bring in $3.39 billion in net sales. Excluding a foreign-exchange impact, the growth rate would be about 2 percentage points higher, said Chief Financial Officer Brian Olsavsky.
Amazon also has been growing its sales from physical stores, including its recently acquired Whole Foods grocery chain.