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Amazon shares slid about 7% in after-hours trading Thursday after the company reported third-quarter results that delivered Amazon Web Services’ fastest growth in nearly five years and the highest operating margin in company history – and still could not outrun investor anxiety over the size of its artificial-intelligence buildout.
The quarter. Net sales rose 12% to $201.9 billion, just under the roughly $202.3 billion analysts had penciled in. Operating income jumped to $28.1 billion from $17.4 billion a year earlier, a 13.9% operating margin that set a company record. Net income fell to $20.7 billion, or $1.89 a share, from $21.2 billion, or $1.95, a year ago – below the roughly $1.96 consensus. The decline was arithmetic, not operational: last year’s quarter included $9.5 billion in pre-tax gains on Amazon’s Anthropic investment.
AWS delivers. Cloud sales surged 39% to $46.0 billion, ahead of the roughly $45.6 billion expected, reaching a $184 billion annualized run rate in the unit’s fastest growth in nearly five years. AWS operating income rose to $17.8 billion from $11.4 billion. North America sales grew 6% to $112.9 billion, with segment operating income nearly doubling to $8.7 billion. International sales rose 5% to $43.1 billion, or 8% excluding currency swings.
The bill. What investors sold was the cost of keeping that growth coming. Free cash flow over the trailing twelve months swung to an outflow of $42.4 billion from an inflow of $14.8 billion a year earlier, consumed by a $94.8 billion jump in purchases of property and equipment that the company said in its filing primarily reflects investments in artificial intelligence. Amazon held its 2026 cash capital-spending plan at approximately $220 billion.
Jassy’s case. “Our AWS investment in functionality and infrastructure is working,” chief executive Andy Jassy said in the release, projecting AWS revenue growth above 40% in both 2027 and 2028. “There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years.”
The outlook. For the fourth quarter, Amazon guided to net sales of $240 billion to $247 billion, growth of 12% to 16%, with operating income of $28.5 billion to $33.5 billion versus $25.0 billion a year earlier. The company expects advertising revenue to grow in the high teens.
The tape. The after-hours slide to roughly $226 followed a 4.3% drop in regular trading to $243.79, as megacap tech absorbed Alphabet’s worst session in years. Even after Thursday’s slide, Amazon remains one of the market’s biggest AI-infrastructure bets – and, as of tonight, its most expensive to fund.
JBizNews Desk | Wall Street
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