Amazon misses third-quarter estimates amid record AI infrastructure spending
Amazon shares fell after the company reported third-quarter revenue below analyst expectations, citing cautious holiday guidance and heavy spending on artificial intelligence.
Amazon reported revenue of $201.94 billion for the third quarter, trailing the $202.2 billion expected by analysts. Shares declined 7% in after-market trading as investors weighed the company's aggressive spending against its core retail and cloud growth.
The company’s cloud division, Amazon Web Services (AWS), grew revenue by 39.3% to $46 billion, marking its fastest expansion in nearly five years. CEO Andy Jassy remains committed to a $220 billion capital expenditure plan for 2024, largely aimed at scaling AI capacity through new data centers and semiconductors.
Despite the growth in AWS, the company reported a free cash flow loss of $42.4 billion over the trailing 12 months, highlighting the financial strain of its AI push. With analysts scrutinizing the returns on these record-level investments, Amazon’s ability to balance rapid infrastructure expansion with profitability remains a key concern for the market.