Amazon Q3 Earnings Miss Estimates as AI Spending Drives $42.4 Billion Free Cash Flow Outflow; Shares Fall 7% After Hours

Amazon (AMZN) reported third-quarter results below Wall Street expectations on Thursday, with earnings per share of $1.89 missing the $1.96 estimate and revenue of $201.94 billion falling short of the $202.31 billion forecast, according to LSEG data. Shares fell more than 7% in after-hours trading. Free cash flow for the trailing 12 months turned negative $42.36 billion, compared with an inflow of $14.79 billion a year earlier, as capital expenditures surged on AI infrastructure. Third-quarter capital spending reached $77.26 billion, about $20 billion above expectations. The company maintained its 2026 capital expenditure plan at roughly $220 billion, and CEO Andy Jassy said spending would be "significantly higher" in 2027. AWS revenue rose 39.3% to $45.98 billion, the fastest growth in nearly five years, while operating margin hit a record 13.9%. However, online stores revenue grew just 2% to $68.47 billion and advertising revenue fell 11% to $19.64 billion, both below estimates. Amazon forecast fourth-quarter revenue of $240 billion to $247 billion, with a midpoint of $243.5 billion, below the roughly $244.5 billion consensus.