Amazon shares fell roughly 5% in after-hours trading after the company posted slightly disappointing total revenues of $201.9bn and offered underwhelming financial forecasts for the Christmas period. The drop came despite bumper growth at Amazon Web Services, where sales rose 39% year on year in the third quarter to $46bn, better than Wall Street expected.
Amazon's idiosyncratic business mix, including its vast ecommerce business, means it remains exposed to a wider range of risks than its Big Tech rivals. The company's fourth-quarter outlook signals that retailers are expecting consumers to tighten their belts into the holiday shopping season as they face a rising cost of living and higher fuel prices.
Investors are looking for strong growth at Amazon to justify chief executive Andy Jassy's plans to devote $220bn to capital expenditure this year, mostly focused on advanced chips and data centres to serve AI computing clients. Capex at Amazon climbed sharply to $75.8bn in the quarter with its free cash flow pushed further into negative territory at minus $33.5bn for the quarter, much further in the red than expected. Net income fell to $20.7bn, which Amazon blamed on a one-time boost in the previous year from investment gains on its stake in Anthropic.
Amazon has been racing rivals to build data centre capacity for customers including AI labs Anthropic and Open AI. Jassy last week said the company's AWS cloud unit had mostly sold out of data centre capacity for 2027, adding that "could invest a lot more, and it wouldn't be a bad use of capital."
Source: Financial Times Companies · Summarized by HeadlinesBriefing