Technology and Scienceupdated 1h ago2 min read
Amazon Misses Earnings, AWS Revenue Jumps 39% as Shares Drop More Than 7%
14outlets comparedWhere the coverage agrees
6 Western Alternative3 Other3 Western Mainstream2 Local WesternThis article is an automated aggregation of coverage from news outlets. Our editorials offer in-depth analysis curated by the NewsCord team.
AWS grew 39% in Q3, reaching $46 billion, fastest pace in nearly five years. Amazon's Q3 earnings per share totaled $1.89, missing analyst expectations of $1.97.
Save coverage image
14 outlets told this the same way.
AWS surges, earnings miss
Amazon reported third-quarter revenue of $201.94 billion and earnings per share (EPS) of $1.89, and the company said the results fell short of Wall Street expectations while shares dropped more than 7% in after-hours trading. Amazon Web Services (AWS) posted its fastest growth in about five years, with AWS revenue surging 39% year over year to $45.98 billion, topping a $45.29 billion market estimate. Amazon said it recorded a free cash flow (FCF) deficit of $42.4 billion over the 12 months through the end of September, and it said cash outflows were up 386% from the same period a year earlier.
Amazon CEO Andy Jassy stressed that “investments in AWS’s capabilities and infrastructure are paying off,” even as the company’s core e-commerce and advertising businesses struggled. Amazon forecast fourth-quarter revenue of $240 billion to $247 billion, while it also said net income fell to $20.69 billion from $21.19 billion in the same period last year.
GeekWireAI spending strains cash
Amazon’s cash flow concerns centered on AI infrastructure spending, with the company reporting free cash flow was negative $42.4 billion for a second consecutive quarter. Amazon said the “primarily reflects investments in artificial intelligence,” and it tied the deterioration in cash flow to increased acquisitions of real estate, facilities and equipment for AI investment. Amazon also confirmed it would keep annual capital spending at $220 billion this year, even as analysts and investors weighed the timing of returns from AI data centers.
ABC Bourse said Amazon’s net income fell 2.4% in the third quarter to $20.7 billion, while FactSet consensus was $1.97 per share. GeekWire reported that Amazon CFO Brian Olsavsky said costs for Amazon Leo, the company’s satellite internet service, were weighing on its fourth-quarter profit forecast as the service got ready to launch later this year.
Outlook and investor focus
Amazon projected AWS revenue growth would exceed 40% next year and in 2028, and it also said AWS exited the quarter at an annualized revenue run rate of approximately $184 billion. On the earnings call, Jassy said Amazon had a backlog of $578 billion in contracted future revenue, and he also said Amazon expected to spend “meaningfully more” on capital projects in 2027 than the roughly $220 billion it planned for this year. Amazon said consolidated operating margins reached a record high, but it still faced scrutiny because free cash flow remained negative over the trailing 12 months.
Quartz reported that Amazon said free cash flow was negative $42.4 billion over the period, versus positive $14.8 billion a year earlier, and it said the change reflected AI-focused investment that raised net cash outlays for property and equipment by $94.8 billion. Beinsure said analysts remained optimistic about the long-term earnings potential of AWS, but it also described the selloff as increasing scrutiny of capital expenditure, depreciation, and the timing of returns on AI investment.
