AMAZON MISSES THIRD-QUARTER ESTIMATES AS AI SPENDING HITS CASH FLOW

Amazon reported third-quarter earnings and revenue below analysts’ estimates on Thursday and gave a cautious sales forecast for the fourth quarter. The company reported earnings of $1.89 a share and revenue of $201.94 billion, against estimates of $1.96 and $202.31 billion from analysts polled by LSEG. Amazon shares fell more than 6% in extended trading after the results. The fourth quarter includes the holiday shopping period, for which Amazon said earlier this month it would hire 300,000 seasonal workers in the United States. It hired 250,000 for the same period last year.

Amazon said sales at its AWS cloud computing division rose 39.3% in the quarter ended 30 September, up from 37% growth in the previous quarter. The company described that as AWS’s fastest growth in nearly five years. AWS revenue reached $45.98 billion, above the $45.29 billion estimate cited by StreetAccount. Advertising revenue of $19.64 billion fell short of StreetAccount’s $20.82 billion estimate. Amazon attributed its negative free cash flow chiefly to increased property and equipment purchases linked to artificial intelligence investment.

Amazon reported a free cash outflow of $42.4 billion over the preceding 12 months, compared with a $7.6 billion outflow reported in the previous quarter. It was the company’s second consecutive quarter of negative free cash flow. Amazon maintained its forecast of $220 billion in capital spending for 2026, up from the $200 billion plan announced in February. Chief executive Andy Jassy told investors the company expected to “spend meaningfully more in 2027”. He said Amazon had a “clear line of sight to attractive financial returns.”