Amazon reported third-quarter results that fell below analyst expectations, prompting a sharp decline in its stock price during extended trading. The company’s earnings and revenue figures both came in short of Wall Street consensus forecasts.
The retailer and technology giant held its capital expenditure guidance unchanged, projecting spending of $220 billion for the full year. This decision comes as major technology firms have been engaged in substantial spending to build out artificial intelligence infrastructure. Earlier in the week, Microsoft reduced its annual capex forecast to $170 billion from $175 billion, while Alphabet maintained guidance within a range of $195 billion to $205 billion.
Amazon’s aggressive investment in AI-related infrastructure contributed to a significant deterioration in its cash position. The company posted negative free cash flow of $42.4 billion on a trailing twelve-month basis, representing a 386% increase year over year. This marked the second consecutive quarter of negative free cash flow, following a $7.6 billion outflow in the prior quarter. The company attributed the shortfall primarily to increased purchases of property and equipment related to AI investments.
Within Amazon’s business segments, cloud services showed strong performance, with AWS revenue climbing 39% year over year to $45.98 billion, surpassing analyst estimates of $45.29 billion and expected growth of 38%. CEO Andy Jassy indicated the company anticipates AWS revenue growth rates exceeding 40% in the following year and in 2028. In contrast, the retail segment produced weaker results, with online sales rising only 2% year over year to $68.47 billion, falling short of projected figures of $69.68 billion. Advertising revenue of $19.64 billion also missed consensus expectations of $20.82 billion.
Looking ahead, Amazon provided fourth-quarter revenue guidance in the range of $240 billion to $247 billion, aligning with consensus estimates of $244.5 billion.
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