Amazon’s latest earnings report sent the stock down about 6% in after-hours trading as investors weighed two pressure points at once: capital spending that came in above expectations and a clear slowdown in the company’s core e-commerce business.
For the third quarter, Amazon reported revenue of $201.9 billion, up 12% from a year earlier. The figure was slightly below analyst estimates. A major drag came from online store sales, which increased only 2% to $68.5 billion.
Retail and advertising growth lost momentum
Amazon’s online retail revenue reached $68.5 billion in the third quarter, up just 2% year over year, its slowest increase since early 2023. Digital advertising, a business closely tied to its e-commerce ecosystem, grew 11%, the weakest pace since Amazon began disclosing the segment separately in 2020.
M Science said one reason for the softer numbers was the timing shift for Prime Day, which moved from July in prior years to June.
Emarketer took a different view. The research firm said the calendar change alone could not fully explain the slowdown in online stores and advertising. In its reading, the data suggests consumers may be cutting back spending in the broader macroeconomic environment, prompting advertisers to adjust marketing budgets.
AWS kept expanding as AI demand supported compute revenue
That weakness on the retail side contrasted with continued expansion at Amazon Web Services, or AWS, which has now posted six straight quarters of accelerating revenue growth. The business has been supported by demand from generative AI companies including OpenAI and Anthropic, which use Amazon’s servers and computing infrastructure.
Chief Executive Officer Andy Jassy said that, beyond AI-related workloads, Amazon’s core cloud computing and data storage businesses were also growing at their fastest pace in recent years.
Analysts are still watching the cloud segment closely. The report noted that improving operating margin at AWS is a positive sign, but some investors continue to expect faster growth given competition from peers including Microsoft and 微软.
Capex stayed high and free cash flow remained under pressure
Another focal point in the earnings release was spending. Amazon said third-quarter capital expenditures on property and equipment exceeded $77 billion, well above market expectations. The company also maintained the forecast it gave in July, calling for full-year 2026 capital expenditures of $220 billion.
Amazon attributed the elevated spending to higher acquisition costs caused by memory chip shortages and to continued investment in hardware buildout, including data centers. Views on AI-related capex remain divided. Some see strategic value in building out computing infrastructure early, while others worry that the scale of spending will weigh on free cash flow in the near term.
Amazon has now reported negative free cash flow for a second straight quarter, a point that remained central to the market reaction after the results were released.
Profit improved and holiday-quarter guidance came in mixed
On profitability, Amazon’s operating income rose to $17.8 billion in the third quarter from $11.4 billion a year earlier.
For the fourth quarter, which includes the year-end holiday shopping season, Amazon projected revenue of $240 billion to $247 billion. The market’s average expectation stood around $244.5 billion. The company forecast fourth-quarter operating income of $28.5 billion to $33.5 billion, while analysts were looking for a midpoint of $33 billion.
The guidance points to a split operating picture: retail revenue growth is narrowing, while operating efficiency and margins are still offering support.
