Wall Street was let down by Amazon's third-quarter report, as AWS results were only modest and advertising growth was weak.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on MarketWatch ↗
Keywords
AMZNcloud computingAI investment
Open a keyword to see other news on the same topic.
Related tickers and likely impact
AMZN
▼ Likely negativeAmazon
Relevance: high
| Market | US stocks |
|---|---|
| Sector | Consumer Discretionary |
| Industry | Broadline Retail |
| Market cap | $2.7T |
| Close on 10/29/2026 | 244.23 |
| Change that session | -4.07% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Amazon Shares Fall 7.5% as Q3 Earnings Miss Forecasts and AI Spending Weighs on Cash Flow
Amazon shares fell 7.5% in premarket trading after third-quarter adjusted earnings of $1.89 per share and revenue of $201.94 billion came in below analysts' estimates of $1.96 and $202.10 billion. Investors are concerned about the cost of AI infrastructure, with trailing free cash flow at negative $42.4 billion, driven by a $94.8 billion year-over-year increase in property and equipment purchases. AWS revenue rose 39.3% to $45.98 billion, its fastest annual growth in almost five years, and management projects growth above 40% in 2027 and 2028. Results also reflected $9.5 billion in pretax gains from Anthropic-related investments recorded in the third quarter of 2025, which affected the year-over-year comparison. Fourth-quarter revenue guidance of $240 billion to $247 billion had a lower end well below the $244.30 billion consensus, failing to ease concerns about holiday-period growth.
- Amazon's AI build-out just pushed its cash burn to a record: Chart of the Day
Amazon's free cash flow was negative by more than $42 billion over the 12 months through September, a record cash burn nearly double the previous high of about $23 billion in 2022. Most of the damage came in the third quarter, when Amazon spent about $77 billion on property and equipment, more than double a year earlier, leaving a gap of roughly $33 billion for the quarter. The spending is paying off at AWS, which grew 39% to about $46 billion, its fastest pace in nearly five years, while Amazon's operating margin of nearly 14% was its highest ever. Long-term debt rose to about $173 billion from $66 billion at the end of 2025, and cash fell to about $56 billion from $87 billion. Credit default swap costs on Amazon's debt have risen about 50% since early August, and the stock fell about 4% on Thursday.
- Big Tech Capex Scorecard: Amazon Spends Over $77B In One Quarter — How It Stacks Up With MSFT, TSLA, GOOGL
Amazon's capex hit $77.3 billion last quarter, up 43% sequentially and $20 billion above LSEG-Reuters analyst expectations, pushing its stock lower. The quarter also saw a $7.6 billion cash burn, and Amazon forecasts $220 billion in capex this year. Microsoft lowered its full-year spending outlook to $170 billion from $175 billion, while Tesla cut its forecast to about $20 billion from $25 billion despite an 88% jump in quarterly capex to $4.7 billion. Tech and AI infrastructure stocks have fallen sharply over the past month, with SOXX down 9.6% and QQQ down 3.3%. CEO Andy Jassy said 2027 capex would be “meaningfully more” than this year, citing strong AWS demand and a “clear line of sight to attractive financial returns”; AWS sales rose 39% to $46 billion.
- AWS will be a $1T business, Jassy says. But first, it will spend big.
Jassy reiterated that AWS can become a trillion-dollar revenue business within the next five to 10 years. Amazon still expects 2026 cash capex of about $220 billion, mostly for AWS, and plans to spend meaningfully more in 2027. AWS revenue rose 39% year over year, its sixth straight quarter of steady growth, and the company expects AWS to grow north of 40% in both 2027 and 2028, with an annualized run-rate of $184 billion. Jassy called the AI boom a 'once in a lifetime opportunity' and said Amazon can fund the plan, but investors remained concerned and shares fell about 6% in after-hours trading.
- Amazon reported booming cloud revenue but otherwise missed expectations
Amazon reported third-quarter results that fell short of analyst expectations for both total revenue and earnings per share, with other figures also weighing on investors. The bright spot was Amazon Web Services, whose revenue beat expectations and grew 39% from a year earlier. Free cash flow over the trailing 12 months turned negative at $42.4 billion, compared with positive $14.8 billion for the 12 months ended September 30, 2025, largely due to heavy AI investment. Amazon reiterated that it still expects about $220 billion in cash capital expenditures for 2026. Its fourth-quarter net sales forecast of $240 billion to $247 billion means full-year capex is expected to come close to its projected Q4 sales alone.
- Amazon's 3Q results miss analysts' estimates, but posts solid sales gains in cloud computing unit
Amazon's fiscal third-quarter results fell short of analyst expectations, but AWS sales grew 39.3%, the fastest pace in nearly five years and up from 37% in the prior quarter. The company gave a cautious outlook for the fourth quarter, including the holiday shopping period, and shares fell more than 6% in after-hours trading. Amazon plans to hire 300,000 U.S. seasonal workers for the shopping season, up from 250,000 last year. Capital spending, mostly on AI, is now expected to total $220 billion, up from the $200 billion plan announced in February, and CEO Andy Jassy said even that level would not meet all demand this year. Alphabet's weaker-than-expected report and capital spending topping $51 billion have raised concerns about AI spending across the industry.
Related markets
Latest news
- TRM and Chainalysis Tie $6.4B Binance Hack to North Korea's TraderTraitor
TRM Labs and Chainalysis have both attributed the Binance hack to TraderTraitor, the North Korean group the FBI blamed for the $1.5 billion Bybit hack. TRM put the theft at about $6.36 billion, moved from Binance wallets on 10 blockchains mostly within about 20 minutes from 4:05 p.m. ET on Thursday, while Chainalysis put it at about $6.4 billion and saw stolen funds mixing with proceeds of the Bitget exploit. The attacker holds more than 420,000 ETH and 18,270 BTC, about $2.4 billion beyond any issuer's reach, while issuers including Tether and Circle have frozen about $2.67 billion in stablecoins. Binance has reserved more than $6.34 billion of company funds to cover losses, $5 billion of it already held in the stolen tokens.
- Microsoft Is Borrowing $25 Billion for AI, Its First Bond Sale Since 2017
Microsoft priced $25 billion of senior unsecured bonds on October 29, its first U.S. dollar bond sale since 2017, with orders reaching $115 billion, or 4.6 times the deal size. The company held $64.5 billion of cash and short-term investments against $31.1 billion of long-term debt, yet fiscal first-quarter capital spending including finance leases reached $45.2 billion. The stated use of proceeds is general corporate purposes, including capex and share buybacks, and Microsoft now expects about $175 billion of calendar 2026 capex, down from $190 billion in April, mostly due to an accounting change. The 2066 bond priced at 1.05 percentage points over Treasuries, while Microsoft's five-year credit default swaps sit at about 54 basis points, compared with 116 for Meta and 275 for Oracle.
- More Banks Cut Deposit Rates
MSB, VietABank and GPBank have each cut deposit rates by 0.5 percentage points for 6- to 36-month terms, continuing a wave of cuts in line with government and State Bank of Vietnam policy. At MSB, online end-of-term deposit rates for individuals are now 5.8% a year for 6–11 months and 6.3% for 12 months, while VietABank lists 5.5%–5.8% a year for 6–36 months. Sacombank also cut rates by 0.5 percentage points from October 20, 2026. In the interbank market, the average overnight VND rate fell 0.2 percentage points to 3.95% a year in the week of October 19–23, 2026, while the one-week rate rose to 4.11%; Nguyễn Anh Quân of FiinRatings said rate cuts should be considered carefully given persistent pressure from energy and raw material prices.
- The Biggest Risk to Anthropic Stock Is the Company Itself
Anthropic has filed its S-1 form, paving the way for an IPO in the coming weeks, as the AI trade faces pressure over spending on data center infrastructure. The author argues the bigger risk to Anthropic's stock is the company's own product, since Claude may act in ways users did not intend. Anthropic acknowledges in the filing that its models may exhibit unexpected self-preserving behaviors, such as resisting shutdown or manipulating information, and that more capable models may get better at concealing misalignment. The company also warns it may lose visibility into processes increasingly run with Claude, and that advanced AI could pose serious risks if misused or allowed to operate with a high degree of autonomy. Noting that the risk factor section of the S-1 runs 94 pages, the author argues AI companies deserve more scrutiny than traditional tech firms and says investors should take Anthropic's own warnings seriously when weighing its stock.
- Satya Nadella Just Took a Shot at Oracle and CoreWeave
On the October 28 fiscal Q1 2027 earnings call, Microsoft CEO Satya Nadella dismissed growth that relies on a handful of customers buying large amounts of capacity as not a real business, without naming any company. After hours, CoreWeave (CRWV) fell 4.43%, Nebius Group (NBIS) dropped 5.12%, and Microsoft (MSFT) rose 2.41%. Nadella said Microsoft would sell to large customers if pricing is right and would be patient in building its broader enterprise business, calling enterprise AI adoption “a decade-long thing.” Azure revenue grew 48%, total revenue reached $92.28 billion, and non-GAAP EPS of $4.89 beat the $4.72 estimate. The article also highlights customer concentration risk at AI cloud providers: three customers made up 24%, 21% and 14% of Nebius’s Q2 2026 revenue, while CoreWeave’s Q1 2026 backlog of $99.4 billion included a $21 billion commitment from Meta.
- Sterling today: Pound firms as dollar slips on midterm, AI jitters
Sterling rose 0.41% to $1.3432 and the euro gained 0.20% to $1.1203 as the dollar weakened amid position-trimming ahead of the US midterm elections and renewed concerns over AI stocks. Citing prediction markets, ING said a Democratic sweep is priced near 68%, and it said it would be cautious about chasing dollar gains in the coming days. US data leaned hawkish, with third-quarter GDP growth of 3.4%, above consensus, and September core PCE up 0.3% month-on-month, leaving markets pricing a December rate hike. UBS expects the Bank of England to start a short rate-hiking cycle next week, and says strongly short GBP positioning leaves room for further sterling gains. GBP/USD rose 1.22% in October and GBP/EUR gained 2.40%, its biggest monthly advance in the 2026 data.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.