Amazon shares drop as heavy spending outweighs strong AWS growth

Amazon shares fell as much as 7% in after-hours trading on Thursday after quarterly earnings missed expectations and heavy infrastructure spending drew investor concern. The decline followed a 4.3% regular-session fall that left the stock at $243.79.

The company reported September-quarter sales of $201.94 billion, a 12% increase from a year earlier. Net income slipped to $20.69 billion, or $1.89 a share, against $21.19 billion and $1.95 a share a year before.

Analysts surveyed by FactSet had expected earnings of $1.97 a share and revenue of $202.2 billion. The weaker result came despite stronger growth in the cloud division.

Cloud expansion carries a large spending bill

Amazon Web Services recorded $46 billion in quarterly revenue, up 39% from a year earlier. That exceeded the $45.61 billion estimate reported by LSEG and represented its fastest growth in almost five years.

Yet the spending needed to expand computing infrastructure weighed on the response to Amazon shares. Capital expenditure reached $77.26 billion in the quarter, roughly $20 billion above LSEG estimates.

The company reported cash burn of $42.4 billion over the preceding 12 months. Its capital spending forecast for 2026 stands at $220 billion, and chief executive Andy Jassy said spending would rise substantially again next year without specifying an amount.

For the holiday quarter, Amazon expects sales between $240 billion and $247 billion. The $243.5 billion midpoint falls slightly short of the $244.51 billion analyst estimate cited by LSEG.

Advertising revenue increased 12% to $19.6 billion, below expectations for 18% growth. Jassy attributed part of that slowdown to Prime Day moving into the second quarter in most major markets.

Amazon said the calendar shift also reduced its overall reported sales growth. Jassy defended the broader investment strategy, while the results showed investors weighing strong demand for cloud services against the pressure on cash generation.

Also read: US Federal Reserve holds rates at 3.75–4% after divided vote | India Mexico trade talks begin as countries sign negotiating terms