AMAZON.COM on Thursday reported a massive cash burn in the third quarter (Q3), sending shares sharply lower, while it signaled higher capital expenditures next year atop an already huge amount in 2026.
Amazon’s cloud computing cash cow, Amazon Web Services (AWS), continued to accelerate, but the company’s aggressive spending to capture artificial intelligence (AI) demand overshadowed broader growth that investors typically crave.
The Seattle-based retailer expects revenue between $240.0 billion and $247.0 billion in the fourth quarter, bracketing estimates of $244.51 billion, according to LSEG, but its midpoint of $243.5 billion came in slightly lower.
Investors soured on the company, driving shares down as much as 7 percent in extended trading, and the shares had declined 4.3 percent in regular trading to end at $243.79. The drop mirrored a broader sell-off among tech stocks on Thursday after Intel warned of flagging PC revenue through next year’s first half, sending its shares down 23 percent in after-hours trading. Alphabet shares fell 12 percent during the regular session, their worst single-day percentage decline ever.
The company said it burned $42.4 billion on a trailing 12-month basis in the September quarter, driven by capital expenditure (capex) of $77.26 billion, which was some $20 billion above estimates, according to data compiled by LSEG.
Amazon reported cash burn of $7.6 billion in the prior quarter, and generated $14.8 billion in the third quarter of last year.
“The free cash flow looks like the ugly part of the report,” said Dave Wagner, portfolio manager at Aptus Capital Advisors. “Operations generated plenty of cash, but their capex just absolutely swallowed it.” “The trend is pretty steep and pretty negative, and that’s the big thing that is alarming in this report.” Like competitors, Amazon has made a huge spending commitment to developing AI software and infrastructure, forecasting $220 billion in capital expenditures this year. Amazon and Google parent Alphabet have maintained their spending expectations, though Microsoft on Wednesday lowered its own to $170 billion from $175 billion.
CEO Andy Jassy told analysts on a conference call he expected capital expenditures to be “meaningfully more” next year, compared with 2026, without elaborating.
Jassy tried to lessen investor concerns following the results. “Our strategy is working, and I expect it will for the foreseeable future,” he said. He said AWS could reach a trillion dollars in revenue in as little as five years.
Still, Jesse Cohen, a senior analyst at Investing.
com, also pointed to Amazon’s free cash flow and “weak guidance” as reasons for the share decline.
“Amazon’s third-quarter report landed as a double disappointment.”
Cloud business drives growth Revenue at AWS rose 39 percent to $46 billion in the third quarter ended September, compared with analysts’ estimate for a 38.2-percent increase to $45.61 billion, according to data compiled by LSEG. AWS revenue recorded a 37-percent jump in the second quarter.
Advertising sales were another disappointment, rising just 12 percent to $19.6 billion from a year earlier, below the 18-percent estimate from LSEG — the first time they missed analyst estimates in seven quarters. The results marked much slower growth than the second quarter’s 26 percent or the 2025 third quarter’s 22 percent.
Jassy, nonetheless, said he was “pleased” with advertising sales and said moving the Prime Day discount event to the second quarter had impacted overall ads in the period. He forecast a return to “high teens” ad sales growth in the current quarter.
He dismissed concerns that AI shopping agents, which automate people’s purchasing, had impacted ad sales. The company during the quarter blocked Meta’s Muse agent from accessing its site to shop on customers’ behalf.
The downbeat fourthquarter outlook sig - nals US retailers could face pain in the holiday season, as consumers tighten shopping budgets amid higher gasoline prices and the rising cost of living.