Amazon shares fell more than 7% in extended trading on Thursday, 29 October 2026, after the company reported third-quarter results that missed Wall Street expectations on both revenue and earnings. The sell-off came despite a strong performance from Amazon Web Services, as investors focused instead on surging capital spending and a sharp deterioration in free cash flow. The reaction made Amazon the latest large technology group to be punished this week for the cost of its artificial intelligence build-out, following a steep fall in Alphabet shares the previous day.
| Reported revenue | $201.94 billion, up 12% year on year |
| Consensus revenue expectation | About $202.3 billion |
| Reported EPS | $1.89 |
| Consensus EPS expectation | About $1.96 |
| Net income | $20.69 billion, down from $21.19 billion a year earlier |
| Operating income | $28.1 billion, above the $26.2 billion forecast |
| AWS revenue | $45.98 billion, up 39% year on year |
| Q3 capital spending | $77.3 billion, well above the $58.7 billion expected |
| Free cash flow (trailing 12 months) | Negative $42.4 billion |
| Full-year 2026 capex plan | $220 billion |
| Q4 revenue guidance | $240 billion to $247 billion |
| Share reaction | Fell more than 7% in extended trading on 29 October 2026; shares had already fallen 4.5% in regular trading that day |
A miss on both headline measures, despite a stronger cloud quarter
Amazon’s revenue of $201.94 billion was only slightly below the consensus of about $202.3 billion, but earnings of $1.89 per share missed the expected $1.96 by a clearer margin. Operating income of $28.1 billion did beat the $26.2 billion forecast, which underlines that the disappointment was not a collapse in underlying trading. Instead, the market read the result as a warning about how much of that trading strength is being absorbed by investment.
Net income fell to $20.69 billion from $21.19 billion a year earlier, a comparison distorted in part by a $9.5 billion pretax gain from Amazon’s Anthropic investment recorded in the year-earlier quarter. SiliconANGLE reported a sharp deterioration in free cash flow as capital spending rose.
AWS was the clear bright spot, with revenue of $45.98 billion growing 39% from a year earlier and beating expectations. Chief executive Andy Jassy has said AWS should grow at more than 40% in 2027 and 2028, a forecast that gave some investors reason to look past the headline miss. Advertising growth, by contrast, slowed to 12%, below the 18% Wall Street had forecast, adding to the sense that parts of the business outside cloud did not keep pace.
Why $77 billion of quarterly spending changed the story
Capital spending reached $77.3 billion in the quarter, far above the $58.7 billion analysts had expected and more than double the $35.1 billion spent in the same quarter last year. Management kept its full-year capital spending plan at $220 billion and signalled spending would rise more meaningfully in 2027. That scale of investment is the price of building data centres and buying chips for AI workloads, but it turned free cash flow deeply negative.
Free cash flow for the trailing twelve months stood at negative $42.4 billion, against negative $7.6 billion in the same period a year earlier. The pattern mirrors Alphabet, as Alphabet shares fell more than 12% on Thursday, 29 October after its own results showed negative free cash flow of $9.1 billion and capital spending of $51.4 billion in the quarter.
For Amazon, the question is no longer whether demand for cloud capacity exists, but how long shareholders will fund the build-out before returns arrive. Jassy told analysts the company has a clear line of sight to attractive returns from the spending. Markets, for now, are pricing in the cash outflow first and the payoff later.
Guidance that failed to calm the market
Amazon guided fourth-quarter revenue to between $240 billion and $247 billion, with the midpoint slightly below the consensus of about $244.5 billion. That range covers the crucial holiday trading period, so even a modest shortfall at the midpoint was enough to dent confidence. US stock futures fell ahead of Friday’s session, with Amazon’s disappointment cited alongside a weak outlook from Intel as a drag on sentiment.
The wider backdrop matters too. Alphabet’s plunge wiped out roughly $500 billion in market value in a single session, the second-largest one-day loss in US market history after Nvidia’s January 2025 fall. Amazon’s drop therefore landed in a market already questioning whether AI spending across the largest technology companies is running ahead of earnings. A single quarter will not settle that debate, but it has sharpened it.
What to watch before the next update
Three measures will shape the next reaction: whether AWS growth moves toward the 40% pace management has forecast for 2027, whether quarterly capital spending eases from the $77.3 billion peak, and whether free cash flow stops deteriorating. Advertising recovery and holiday-quarter trading against the $240 billion to $247 billion guidance range will also be tested in the coming weeks.
None of those answers will arrive until the next report, so Friday’s regular trading session is likely to reflect positioning rather than new company information. Investors who bought on the cloud story still have that story intact; what changed on Thursday was the price they are willing to pay while Amazon builds it.
Questions readers are asking
Why did Amazon shares fall if AWS grew 39%?
Because headline revenue and earnings missed expectations, advertising slowed, and capital spending of $77.3 billion pushed free cash flow to negative $42.4 billion.
What did Amazon actually report for Q3 2026?
Revenue $201.94 billion, EPS $1.89, net income $20.69 billion, operating income $28.1 billion, and AWS revenue $45.98 billion.
How does this compare with Alphabet?
Alphabet shares fell more than 12% on 29 October after its results also showed heavy AI capital spending and negative free cash flow, wiping out roughly $500 billion in market value.
What is Amazon guiding for Q4?
Revenue of $240 billion to $247 billion, with the midpoint slightly below consensus.
Is the Friday share price already known?
No — this article reports the extended-trading fall on 29 October and the futures reaction ahead of Friday’s session; the regular-session outcome for 30 October is not claimed here.
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