Amazon Q3 earnings miss expectations, shares slide over 7%

UPDATE - follow-up to Amazon posts negative free cash flow of $42.4 billion, holds 2026 capex unchanged: Amazon shares fell more than 7% in after‑hours trading on Thursday after the company posted third‑quarter earnings that missed Wall Street forecasts. Revenue for the quarter was $131.5 billion, below analysts’ median estimate of $133.0 billion. The company kept its 2026 capital‑expenditure outlook at $220 billion, saying spending will stay at that level this year. Amazon said AI‑related purchases of property and equipment drove a rise in cash‑outflow, resulting in a negative free cash flow of $42.4 billion for the trailing twelve months, a 386 % increase from a year earlier and up from a $7.6 billion deficit in the prior quarter. Fourth‑quarter revenue is projected between $240 billion and $247 billion, with the midpoint short of the $244.5 billion Wall Street estimate. Amazon Web Services generated $45.98 billion in revenue, outpacing the $45.29 billion consensus and growing 39 % year over year. CEO Andy Jassy said AWS revenue growth will stay above 40 % in 2024 and 2028 and that the cloud unit could become a $1 trillion business within five to ten years. He also noted that Amazon’s Trainium and Graviton AI chips are growing at triple‑digit rates and that Trainium will be offered to external customers late in 2027. Net income fell to $20.69 billion, or $1.89 per share, from $21.19 billion, $1.95 per share a year ago, after a $9.5 billion pre‑tax gain from an Anthropic investment recorded in the 2025 quarter. Online sales rose 2 % to $68.47 billion, missing the $69.68 billion forecast, while advertising revenue climbed 11 % to $19.64 billion, also below estimates. Both segments were affected by Amazon moving its Prime Day event earlier to avoid overlapping with the FIFA World Cup.## Context The report shows how Amazon’s push into AI infrastructure is straining cash flow even as its cloud business continues strong growth, a pattern seen across major tech hyperscalers.