Amazon Misses Q3 Estimates as AI Spending Pressures Cash Flow

Amazon shares fell sharply in extended trading on Thursday, October 29, 2026, after the e-commerce and cloud computing company reported third-quarter earnings and revenue below Wall Street expectations. The results renewed investor concerns about the financial impact of artificial intelligence infrastructure investments, while Amazon maintained its full-year capital expenditure forecast at $220 billion.

Amazon reported earnings per share of $1.89 on revenue of $201.94 billion, compared with analyst estimates of $1.96 and $202.31 billion, respectively, according to LSEG data cited by CNBC. Bloomberg's analyst consensus, cited by Yahoo Finance, put expectations at $1.97 per share and $202.25 billion in revenue.

The stock declined more than 7% in extended trading following the earnings announcement, according to CNBC. Yahoo Finance reported a drop of more than 9%, reflecting the negative market reaction to the results.

Amazon Web Services (AWS), the company's cloud computing division, generated $45.98 billion in revenue, exceeding StreetAccount's estimate of $45.29 billion, according to CNBC. Yahoo Finance reported AWS revenue of approximately $45.9 billion against a Bloomberg consensus estimate of $45.68 billion.

Advertising revenue reached $19.64 billion, below the $20.82 billion expected by analysts surveyed by StreetAccount, CNBC reported. Online store sales totaled $68.47 billion, missing the $69.6 billion forecast, according to Yahoo Finance.

The latest results highlight the pressure on Amazon to translate heavy investment in AI infrastructure into financial returns. CNBC reported that the company retained its 2026 capital expenditure forecast of $220 billion as major technology companies continue expanding computing capacity to support demand for AI services.

Amazon's spending has weighed on cash generation. According to CNBC, the company recorded negative free cash flow of $42.4 billion over the trailing 12-month period, a 386% increase in the outflow from a year earlier. The company had reported negative free cash flow of $7.6 billion in the preceding quarter.

CNBC attributed the cash flow deterioration primarily to increased purchases of property and equipment associated with AI investments. The spending comes as large technology companies reassess the pace of infrastructure expansion.

Microsoft lowered its capital expenditure forecast for the year to $170 billion from $175 billion earlier in the week, CNBC reported. Alphabet maintained its forecast in a range of $195 billion to $205 billion, indicating that investment plans differ across major technology companies.

Market concerns have also affected Amazon shares since the company's strong second-quarter results. Bloomberg reported on October 29 that the stock had fallen more than 10% from an early August record, following a rally after July 31, when accelerating AWS revenue growth helped drive its strongest single-day performance since 2012.

Bloomberg attributed the subsequent weakness to concerns about AI-related investments, pressure from higher interest rates, and competition from AI services such as Meta Platforms Inc.'s Muse. The latest earnings shortfall added to investor scrutiny of cloud growth and the returns expected from major infrastructure commitments.

Amazon forecast fourth-quarter revenue of $240 billion to $247 billion, according to CNBC and Yahoo Finance. The midpoint of that range is close to LSEG's analyst consensus of $244.51 billion, while the quarter typically benefits from increased consumer spending during the holiday shopping season.

The earnings announcement followed Alphabet's disappointing results, which sent its shares down more than 12%, according to Yahoo Finance. Microsoft had reported better-than-expected results on Wednesday, underscoring differing investor reactions to the performance and spending plans of major technology companies.