Amazon misses on earnings and holds capex steady, adding to AI spending jitters
AWS revenue rose 39% as Amazon kept full-year capital spending at $220 billion, easing some growth concerns despite a profit miss.
- On Thursday, Amazon reported third-quarter results revealing a negative free cash flow of $42.4 billion for the trailing 12 months while maintaining its $220 billion capital expenditure forecast for 2026.
- Massive spending on AI infrastructure and data centers has eroded cash flow as Amazon prioritizes aggressive capacity expansion to meet surging demand for AI computing power in the global race.
- Amazon Web Services revenue climbed 39% to $46 billion, marking its fastest growth in nearly five years, while retail online sales rose only 2% year over year to $68.47 billion.
- Investors drove shares down nearly 7% in extended trading following the results, reacting to Amazon's fourth-quarter revenue guidance of $240 billion to $247 billion, signaling holiday season retail concerns.
- Analysts expect capital expenditures to exceed $280 billion in 2027, as CEO Andy Jassy confirmed cloud capacity is "largely sold out" for next year amid the intensifying AI infrastructure race.
108 Articles
108 Articles
High costs for the construction of new AI data centers and the restraint in consumption have burdened Amazon's quarterly balance sheet. Market analyst Andreas Lipkow explains in conversation with Dietmar Deffner what this means for the company's share.
High costs for AI investments burden the balance sheet. Cloud subsidiary AWS could achieve 2031 trillion sales.
Times of India
rtl.luAmazon cloud business accelerates but shares drop on profit miss
Amazon experienced a notable decline of over seven percent in its shares following the release of its quarterly earnings, which failed to meet analyst forecasts. The tech giant reported a total revenue of $201.9 billion, revealing struggles across multiple sectors. Nonetheless, the growth of its AWS cloud division stood out as a silver lining.
Amazon fell short of market expectations in its third-quarter earnings, despite growth in its cloud business, AWS, due to sluggish e-commerce and massive spending on AI data centers. As a result, the free cash flow deficit deepened, and with future earnings forecasts set low, the stock price is showing a downward trend.
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