Amazon.com Inc. shares fell about 6% to 7% in Friday premarket trading after the company missed third-quarter estimates on both revenue and earnings and delivered a holiday-quarter outlook that landed slightly under consensus, even as its cloud unit posted its fastest growth in years. The stock had already closed Thursday down 4.25% at $243.79 ahead of the report.
Net sales rose 12% year over year to $201.94 billion, versus the $202.31 billion analysts polled by LSEG expected. Diluted earnings were $1.89 per share, below the $1.96 consensus. Operating income of $28.1 billion exceeded expectations, and the fourth-quarter revenue guidance midpoint of $243.5 billion was just under the $244.2 billion consensus, Seeking Alpha reported.
Amazon Web Services was the bright spot. AWS revenue rose 39% to $46.0 billion, accelerating from 37% growth in the second quarter, with AWS operating income of $17.8 billion. Management said it now projects AWS growth above 40% in both 2027 and 2028, according to Yahoo Finance. Online store sales of $68.47 billion, however, trailed the $69.6 billion Wall Street anticipated, while advertising revenue reached $19.6 billion.
The concern is the cost of that growth. Capital expenditures reached $77.3 billion in the quarter, well above the $58.7 billion Street estimate and more than double the $35.1 billion a year earlier, according to SiliconANGLE. Amazon reiterated its full-year 2026 capex plan of roughly $220 billion, raised from $200 billion in July partly because of higher memory chip costs. Trailing 12-month free cash flow was a $42.4 billion outflow.
Analysts remain divided on whether the spending will pay off. Forrester's Tracy Woo said the investment profile suggests Amazon sees future capacity constraints rather than demand constraints. One major brokerage had kept a Buy rating and $320 price target ahead of the report, saying AI returns on capital spending are the key stock driver. Technical analysts, meanwhile, are watching the $240 to $245 support zone, and TradingKey flagged $200 as the next support level.
Startup Fortune noted Amazon cut roughly 10% of its corporate workforce over the past twelve months even as it lifted capital spending guidance by $20 billion. The company has described its strategy as building toward two trillion-dollar businesses, AWS and its stores operation, a path that depends on balance-sheet capacity and the timing of new data center capacity coming online.
The report lands as Nasdaq-100 futures slid about 2.3% on Friday, with weak outlooks from other technology names adding to pressure on AI-linked shares. For a paper portfolio, the reaction raises a broader question: whether investors will keep rewarding hyperscaler capex growth when free cash flow is negative and inflation remains elevated.
Traders should watch whether Amazon can reclaim the $240 level after gapping below it, how analysts revise fourth-quarter estimates after the weaker holiday guide, and whether AWS acceleration persuades dip buyers to step in. A reiterated $220 billion capex plan limits near-term surprises, but continued capex overshoots could keep pressure on the shares.