Amazon shares slid 7% in after‑hours trading on Thursday, a reaction to Q3 earnings that missed Wall Street estimates. Net income fell to $20.69 billion from $21.19 billion YoY, while EPS slipped to $1.89 from $1.95. Revenue rose 12% to $201.94 billion, surpassing the $202.2 billion consensus.
The cloud arm, Amazon Web Services, was the bright spot: revenue hit $46 billion, up 39% YoY and beating the $45.61 billion estimate. That growth rate eclipses the 37% rise in the prior quarter and marks AWS’s fastest pace in almost five years. CEO Andy Jassy told analysts that AWS could exceed $1 trillion in annual revenue within the next five to ten years.
Capital expenditure surged to $77.26 billion, $20 billion above LSEG estimates, as Amazon ramps up AI data‑centre infrastructure. The company forecast a 2026 capex of $220 billion, signalling a “meaningfully more” spend next year. Trailing 12‑month cash burn climbed to $42.4 billion, largely driven by the capital outlay.
Advertising revenue, however, missed expectations: it rose 12% to $19.6 billion, short of the 18% growth forecasted by analysts. This marks the first miss in seven quarters, a slowdown that Jassy linked to the earlier‑than‑usual Prime Day timing. Excluding the calendar shift, year‑on‑year growth would have been roughly four percentage points higher.
Looking ahead, Amazon projected Q4 net sales of $240–$247 billion, a 12–16% YoY rise, slightly below the $244.51 billion consensus. The guidance reflects cautious sentiment amid investor concerns over AI‑related capital intensity. Analysts remain divided on whether the AI investments will translate into sustainable cash generation.
The broader tech landscape echoed the anxiety: Alphabet shares fell 12% after a surge in property and equipment spend, while Microsoft trimmed its 2026 capex outlook to $170 billion. The market’s reaction underscores a growing unease that AI infrastructure can strain cash flows even for the industry’s biggest players.