Amazon Shares Fall 7.3% as Rising AI Capex Outweighs AWS Growth Outlook

Amazon (AMZN-US) shares fell about 7.3% in after-hours trading after the company reported third-quarter results, as heavy capital spending overshadowed an aggressive long-term growth forecast for its cloud unit. CEO Andy Jassy said AWS revenue will grow more than 40% in both 2027 and 2028, with the unit's annualized revenue reaching $184 billion and backlog at $578 billion, more than double year-ago levels. AWS revenue rose 39.3% in the quarter, its sixth straight quarter of accelerating growth. Q3 cash capital expenditures reached $75.9 billion, pushing free cash flow negative, while fourth-quarter operating income guidance of $28.5 billion to $33.5 billion was seen as conservative. Amazon expects 2026 capex of about $22 billion and a significant increase next year. AWS posted a 38.7% operating margin, though CFO Brian Olsavsky declined to commit to sustaining that level, citing lower AI margins and rising memory component prices. Q4 revenue is forecast at $240 billion to $247 billion.