Amazon shares fell by almost 5% after the market closed following the publication of its third-quarter financial results. Both earnings and revenue fell short of analysts’ expectations.
The technology conglomerate reported revenue of $201.94 billion (€180.32 billion) and earnings per share of $1.89, falling short of the expected revenue of $202.10 billion (€180.46 billion) and earnings per share of $1.96. This shortfall was partly due to exchange rate fluctuations, which reduced revenue by $900 million (€803 million), while earlier non-operating gains from its stake in Anthropic had inflated the previous year’s figures.
A major reason for the negative market reaction is Amazon’s sharply rising investment in artificial intelligence. Amazon’s free cash flow plunged over the past year to a negative $42.4 billion (€37.8 billion), largely because spending on property and equipment rose by $94.8 billion (€84.6 billion) to support AI initiatives.
These huge infrastructure investments – including the complex hardware and software needed for large-scale data processing – are under intense scrutiny from investors. There is growing concern about the enormous debts companies are taking on to finance such expansion, which has negatively affected global government bond markets.
Despite the immediate share price decline, Amazon’s cloud division, Amazon Web Services (AWS), recorded strong growth figures. AWS reported a 39.3% increase in revenue compared with the same period last year, bringing the total to $45.98 billion (€41.05 billion) for the quarter.
CEO Andy Jassy stressed that these strategic investments are paying off and predicted that growth rates would remain above 40% through to the end of 2028. As one of the leading hyperscalers, alongside companies such as Microsoft and Alphabet, Amazon continues to expand its data capacity aggressively.
Beyond its internal infrastructure, Amazon has strengthened its position in the AI sector through its substantial backing of Anthropic. The creator of Claude recently filed for a stock market listing that could potentially become the largest initial public offering in history.
Looking ahead to the final quarter, Amazon expects revenue of between $240 billion and $247 billion (€214–220 billion), while estimated annual capital expenditure remains at around $220 billion (€178 billion).
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