Amazon shares dropped sharply in extended trading after reporting fiscal third-quarter revenue of $201.9 billion and earnings of $1.89 per share on October 29, 2026. While the e-commerce giant posted record-breaking cloud growth in AWS, weaker-than-expected retail performance, lower advertising revenues, and heavy artificial intelligence spending weighed heavily on investor sentiment.
The Seattle-based technology titan reported total net sales rising 12.1% year on year to $201.9 billion, aligning closely with Wall Street consensus estimates. However, bottom-line profitability fell short. GAAP earnings came in at $1.89 per share, missing consensus estimates by 3.5%, while net income dropped to $20.69 billion from $21.19 billion a year earlier. Company executives attributed the earnings decline primarily to a $9.5 billion pre-tax gain from an investment in the artificial intelligence startup Anthropic recorded during the same period in 2025.
Investors reacted swiftly to the mixed financial report. Amazon shares plunged more than 7% in extended trading following the announcement, reflecting broader anxieties across the technology sector regarding the massive capital outlays required to build out artificial intelligence infrastructure. Alongside Amazon, shares of fellow tech giants have faced intense scrutiny amid similar spending patterns, with Alphabet experiencing a steep selloff following quarterly results that disappointed investors.
AWS Revenue Soars Amid Massive Capital Spending
Amazon Web Services provided the financial highlight of the quarter, posting a 39.3% sales increase to reach $45.98 billion. This performance outpaced Wall Street forecasts and marked the cloud unit’s fastest growth rate in nearly five years.
Chief Executive Officer Andy Jassy defended the company’s aggressive investment strategy during the earnings release, pointing directly to the returns generated by the cloud division’s infrastructure push. Jassy noted that the company anticipates revenue growth rates exceeding 40% in both 2027 and 2028, and previously told investors that Amazon could eventually cultivate a trillion-dollar annual revenue business.
Our AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenue growth in Q3 ($184 billion revenue run rate) and projected revenue growth rates of over 40% both in 2027 and in 2028.
Andy Jassy, President and CEO, Amazon
That growth comes at a steep financial price. Amazon maintained its capital expenditure forecast for 2026 at an expected $220 billion, driven by the massive expansion of data centers, semiconductors, robotics, and satellites to support artificial intelligence workloads. This spending surge has severely impacted the company’s cash generation.
Retail and Advertising Divisions Face Headwinds
While cloud computing thrived, Amazon’s core retail and advertising segments encountered notable bumps. Online retail sales climbed 2% year over year to $68.47 billion, falling short of analyst projections of $69.68 billion. Meanwhile, advertising revenue reached $19.64 billion, missing consensus estimates that had projected higher totals.
Company executives pointed to specific operational shifts that distorted the period’s comparisons. Amazon made the strategic decision to pull its annual Prime Day shopping event forward from its traditional third-quarter window into the second quarter to avoid overlapping with the FIFA World Cup in July. According to internal estimates, this calendar adjustment depressed third-quarter year-over-year sales growth by approximately 400 basis points.
Cautious Fourth-Quarter Outlook and Holiday Hiring
Looking ahead to the pivotal holiday shopping period, Amazon projected fourth-quarter net sales to land between $240 billion and $247 billion. While representing a potential 12% to 16% increase over the same period last year, the guidance midpoint sat slightly below Wall Street’s consensus expectations.
To prepare for peak e-commerce demand, the company announced plans to hire 300,000 seasonal U.S. workers, stepping up from the 250,000 temporary positions added during the previous holiday season.
