Amazon shares AMZN fell sharply in after-hours trading on Thursday after the company reported third-quarter revenue and earnings below Wall Street expectations, while its $220 billion capital expenditure plan renewed concerns about the cost of its artificial intelligence expansion.
The stock declined more than 4% after falling 4.3% during regular trading.
Amazon reported revenue of $201.9 billion for the quarter, up 12% year over year but below analysts’ expectations of $202.2 billion, according to FactSet.
Net income fell to $20.7 billion, or $1.89 per share, from $21.2 billion, or $1.95 per share, a year earlier. Analysts had expected earnings of $1.97 per share.
The results came as investors continued to assess whether major technology companies can generate sufficient returns from their substantial AI infrastructure investments.
AWS growth beats estimates as spending concerns persist
Amazon Web Services (AWS) remained a bright spot, with revenue rising 39% year over year to $46 billion, exceeding analysts’ expectations of $45.47 billion.
The growth rate also surpassed Wall Street’s forecast of 37.8%.
Chief Executive Andy Jassy defended the company’s infrastructure spending, saying in a statement that Amazon’s investments in AWS were delivering growth.
He also said the company expects AWS revenue growth of more than 40% in 2027 and 2028.
However, the company’s spending plans continued to weigh on investor sentiment.
Amazon maintained its forecast of approximately $220 billion in capital expenditure for 2026, with much of the investment directed towards AI infrastructure and data centres.
Capital expenditure reached $75.9 billion in the third quarter.
The spending contributed to a cash outflow of $42.4 billion over the trailing 12 months, compared with a cash inflow of $14.8 billion in the year-earlier period.
Amazon’s increased investment reflects the resources required to expand computing capacity as demand for AI services grows.
However, the resulting pressure on cash flow has become a key consideration for investors evaluating the company’s long-term returns.
Retail sales and profits fall short of expectations
Amazon’s North American sales increased 6% year over year to $112.9 billion, missing analysts’ forecast of $113.2 billion.
Revenue from its online stores business rose 2% to approximately $68.5 billion.
The company said the timing of Prime Day, which moved into the second quarter in several major countries, affected its third-quarter revenue growth.
Advertising revenue growth also slowed to 12%, partly because of the shift in the shopping event. Amazon expects advertising growth to rebound to the high teens in the fourth quarter.
Net income was also affected by a comparison with the previous year.
Amazon said third-quarter 2025 profit included $9.5 billion in pretax gains on its investment in AI company Anthropic.
For the fourth quarter, Amazon forecast revenue of $240 billion to $247 billion, representing growth of 12% to 16%.
The guidance includes some expected negative effects from currency fluctuations. The company also projected operating income of $28.5 billion to $33.5 billion.
Future AI investment raises cash flow questions
Although Amazon did not provide capital expenditure guidance for 2027, Evercore ISI analysts forecast spending could reach $320 billion next year, alongside negative free cash flow of $57 billion.
That outlook highlights the financial demands of the AI infrastructure race, even as AWS delivers faster growth.
Amazon’s spending strategy also comes amid broader scrutiny of data-centre expansion and the resources needed to support it.
The company has pledged more than $1 billion over five years towards communities hosting its data centres.
For investors, the central question remains whether strong cloud growth can translate into sustainable cash generation as Amazon continues to invest heavily in AI infrastructure.
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