Amazon missed Wall Street's third-quarter earnings and revenue estimates, and its shares fell more than 6% in extended trading. Free cash flow stayed negative as AI spending climbed, while AWS growth beat expectations.
Amazon shares plunged more than 6% in extended trading on Thursday after the company reported third-quarter results that missed analyst estimates. CNBC described the results as disappointing, with negative free cash flow reflecting swelling AI investments.
Earnings per share came in at $1.89 against the $1.96 analysts polled by LSEG expected. Revenue reached $201.94 billion versus $202.31 billion estimated.
AI spending pushes free cash flow further negative
The company posted negative free cash flow for the second consecutive quarter, with an outflow of $42.4 billion over the trailing twelve months. Amazon said the shortfall was primarily due to higher purchases of property and equipment tied to AI investments.
Amazon held its 2026 capital expenditure forecast at $220 billion. CEO Andy Jassy told investors the company expects to spend meaningfully more in 2027, according to Business Insider.
Jassy also said on the call that Amazon has a "clear line of sight to attractive financial returns".
AWS beats estimates while online sales and advertising miss
Sales in Amazon's cloud segment rose 39% year over year to $45.98 billion, topping the $45.29 billion consensus forecast, according to StreetAccount. Jassy said he expects AWS revenue growth of over 40% in 2027 and 2028.
Other units fell short. Online sales gained 2% to $68.47 billion, below the projected $69.68 billion, and advertising revenue rose 11% to $19.64 billion against a $20.82 billion consensus.
Fourth-quarter guidance falls below expectations
Amazon expects fourth-quarter revenue between $240 billion and $247 billion. The midpoint sits below the $244.5 billion Wall Street expected, according to LSEG.
The Financial Times reported that the outlook points to weaker holiday retail sales as consumers face a rising cost of living. CFO Brian Olsavsky told investors Amazon expects a bigger hit from high fuel and transportation costs in the fourth quarter.
Sources: CNBC, Business Insider, Financial Times
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