Shares of Amazon cratered 11.3% to $225.80 after the company's October 29 Q3 report delivered a rare double miss on earnings and revenue, even as its cloud division posted its best growth in five years. The result forces a pointed question: how long will investors bankroll one of the largest infrastructure buildouts in corporate history before demanding cash returns?
A Narrow Miss That Hit Like a Freight Train. Amazon reported earnings of $1.89 per share versus the $1.97 consensus, while revenue of $201.94 billion fell short of the $202.22 billion estimate by $278 million. The shortfall looks small on paper, but net income actually fell 2.37% year over year because Q3 2025 included pre-tax gains from investments in Anthropic that did not repeat.
Advertising revenue landed at $19.6 billion, short of the roughly $20.8 billion expected, while online store sales of $68.5 billion also trailed forecasts. For a stock that had been priced for flawless execution, even modest softness in retail and ads was enough to trigger the selloff.
AWS Is Booming — But So Is the Bill. AWS revenue grew 39% to $45.98 billion, its fastest pace in nearly five years, and CEO Andy Jassy guided to more than 40% growth in both 2027 and 2028, citing a contracted backlog of $578 billion — more than double a year earlier.
Operating income hit $28.1 billion, up 61% year over year, at a record 13.9% company-wide operating margin. The cloud business is clearly accelerating, but investors are weighing today's cash drain against tomorrow's payoff.
$220 Billion in Capex — and Counting. The cash outflow stemmed from a $94.8 billion year-over-year increase in property and equipment purchases "primarily" for AI infrastructure; quarterly capital spending hit $77.3 billion, nearly $20 billion above analysts' $58.7 billion estimate.
Trailing twelve-month free cash flow was an outflow of $42.4 billion.
Amazon kept its 2026 capex forecast at roughly $220 billion, and Jassy told analysts the company expects to "spend meaningfully more in 2027."
The Core Tension for Shareholders. Management says AWS typically invests 6–24 months before billing new customers , meaning the revenue tied to today's spending won't show up until at least mid-2027. With the stock now trading at roughly 19× trailing earnings, the market is pricing in doubt that the returns will arrive fast enough to justify negative free cash flow at this scale. The next few quarters will determine whether Amazon's AI bet is visionary or reckless.