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Amazon became the latest Big Tech company to disappoint investors on Thursday, October 29, reporting third-quarter results that missed on the headline numbers markets watch most closely — even as its cloud business and operating profit beat expectations. Shares fell about 6–7% in after-hours trading, extending a week in which Alphabet's miss had already rattled technology stocks.
The results tell a split story: a genuinely strong operating performance, buried under a cautious outlook for the all-important holiday quarter and an enormous AI spending bill. Here is the breakdown.
The headline miss
Amazon reported third-quarter revenue of $201.9 billion, just below Wall Street estimates of about $202.3 billion, and earnings per share of $1.89, below forecasts of about $1.96, according to reports from Zacks. Net income of $20.7 billion was down about 2% from a year earlier, though Amazon attributed that decline mainly to a $9.5 billion pre-tax gain on its Anthropic investment included in the prior-year period — an accounting comparison, not an operating collapse.
Advertising revenue of $19.64 billion also came in below estimates of about $20.82 billion, and North America sales of about $113 billion were slightly light. The miss was small in percentage terms — revenue fell short by less than 0.2% — but after Alphabet's miss the day before, investors were in no mood to forgive even a narrow shortfall.
The bright spots: AWS and margins
Amazon Web Services, the cloud division investors watch most closely, was the standout. AWS revenue reached $45.98 billion, above estimates of about $45.3–45.7 billion, with growth of 39% year over year — accelerating from about 37% in the previous quarter. AWS is now running at a $184 billion annualised revenue rate, and chief executive Andy Jassy believes AWS will grow at more than 40% in both 2027 and 2028.
Operating income of $28.1 billion beat estimates of about $26.2 billion by a wide margin, pushing the operating margin to 13.9% — the company's highest ever, according to Zacks. AWS operating income of $17.8 billion was up 55% year over year. On operations alone, this was a very good quarter.
The problem: a $77 billion spending quarter and soft guidance
Capital spending during the quarter reached $77.3 billion, well above forecasts of about $57.4 billion, as Amazon accelerates its AI infrastructure buildout. Full-year capital spending will remain at $220 billion, according to management. The aggressive spending sharply worsened Amazon's free cash flow position, which turned deeply negative in the quarter — the same pattern seen at Alphabet and Meta, whose shares also plunged after their announcements.
Then came the guidance. For the fourth quarter — the holiday season, Amazon's most important retail period — the company expects revenue of $240–247 billion and operating income of $28.5–33.5 billion. The revenue midpoint of about $244 billion sits just below consensus, and the operating income midpoint of about $31 billion is roughly $2 billion below what analysts expected. As CNBC-TV18 reported, shares ended more than 7% lower in extended trading at $225.99, after already falling 4.5% in regular trade before the results.
What it means — and the Alphabet parallel
Amazon's quarter rhymes with the story we covered in our Alphabet earnings miss explainer and contrasts with Microsoft's earnings beat, where Azure's 48% jump carried the day. The pattern across Big Tech this season is consistent: cloud growth is real and accelerating, but the AI infrastructure bill is arriving faster than the profits, and any softness in guidance gets punished immediately.
For Amazon specifically, the question into the holidays is whether the record margin and AWS acceleration can outweigh a cautious outlook and a spending pace that has turned free cash flow negative. Investors, at least overnight, decided they could not — and with the stock back near breakeven for the year, the holiday quarter now carries the whole investment case.