Amazon Shares Fall On Q3 Earnings Miss As Big Tech Market Rout Continues
Amazon shares fell by as much as 9% in after-hours trading after its third-quarter earnings missed analysts’ forecasts, adding to a wider sell-off in technology stocks. The results renewed investor concerns about whether heavy spending on artificial intelligence will generate sufficient returns, although Amazon’s cloud unit reported strong growth.
Diluted earnings per share were $1.89, compared with $1.95 a year earlier and analysts’ forecast of $1.97. Revenue rose 12% to $201.9 billion, slightly below expectations of $202.25 billion; Amazon said earnings were affected by a $9.5 billion pre-tax gain from its Anthropic investment in the same quarter last year. AWS revenue grew 39%, while Amazon forecast fourth-quarter revenue of $240 billion to $247 billion, against an analyst consensus of $244.5 billion. The company also said the earlier timing of Prime Day reduced its reported third-quarter revenue growth by about four percentage points.
In short
- Amazon earnings per share fell short of forecasts.
- Revenue rose 12% to $201.9 billion.
- AWS grew 39% as investors questioned AI spending returns.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Investors can reasonably view the earnings miss as a warning that Amazon’s substantial spending, including on AI, may not translate into returns quickly enough to justify expectations. Earnings per share and revenue both fell short of forecasts, and the share-price drop reflects the risk that continued investment could weigh on profits if growth disappoints.
The case against
The results also offer grounds for confidence: AWS revenue grew 39%, overall revenue rose 12%, and Amazon’s fourth-quarter forecast spans the analyst consensus. Comparisons were complicated by a large prior-year gain from its Anthropic investment, while the earlier Prime Day timing reduced reported quarterly revenue growth, so the miss may not signal a broad deterioration in the business.
Explained simply
Amazon is a global online retailer and technology company. Its businesses include online shopping, advertising and Amazon Web Services (AWS), which rents computing power and storage to companies and is a major source of its profits.
Investors compare a company’s results with forecasts to judge how its business is performing and what it might earn in future. Amazon has also been spending heavily on artificial intelligence, while investors weigh whether that investment will bring enough revenue and profit.
Technology shares can move together when investors reassess the sector’s prospects, so concerns about one company may form part of a wider market shift. Amazon’s results include factors that affect comparisons, such as a previous gain from its investment in AI company Anthropic and the timing of Prime Day.
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