Amazon.com Inc. saw its shares tumble up to 9% in after‑hours trading on Thursday after reporting third‑quarter results that fell short of Wall Street expectations. The e‑commerce and cloud giant posted earnings of $1.89 per diluted share, down from $1.95 a year earlier, while analysts had forecast $1.97. Total revenue rose 12% year over year to $201.9 billion, but missed the consensus estimate of $202.25 billion.
Key drivers of the earnings miss
In its earnings release, Amazon attributed the earnings shortfall primarily to a $9.5 billion pre‑tax gain tied to its investment in AI start‑up Anthropic during the third quarter of 2025. The gain, while sizable, was not enough to offset other pressures on profitability.
Revenue outlook and market reaction
Looking ahead, Amazon projected fourth‑quarter revenue between $240 billion and $247 billion. That range leaves open the possibility of falling below the Street’s median outlook of $244.5 billion. During regular trading, the stock slipped 4% and then fell below the $230 mark in after‑hours trading, eventually stabilizing at a 6% decline ahead of a scheduled conference call with senior executives.
The broader tech sector has been under pressure as investors seek tangible returns on massive artificial‑intelligence spending. Alphabet (Google’s parent) shares plunged 12% on Thursday, erasing roughly $500 billion in market value after missing its own revenue targets. Nvidia’s stock is down 6% over the past month amid growing skepticism, and Meta’s shares have slipped 5% in the past week despite a solid earnings report.
Amazon’s AI investments and business segments
Amazon Web Services (AWS) continues to invest heavily in AI. CEO Andy Jassy said the spending helped generate a 39% revenue increase for AWS in the quarter and set an annual run‑rate target of $184 billion. He projected more than 40% revenue growth for AWS in 2027 and 2028, emphasizing that the “investment in functionality and infrastructure is working.”
Advertising, a segment that had been growing over 20% each quarter in recent years, showed a mixed picture. Revenue from advertising reached $19.6 billion, a 12% increase from the year‑ago period, but the line declined from the second quarter, marking the first quarter‑over‑quarter drop after a streak of growth. Advertising has been a strategic pillar for Prime Video, especially as the service expands its sports rights and other content.
Amazon also highlighted a timing shift for its flagship Prime Day event. The sales‑driven holiday moved earlier this year, occurring in the second quarter for most major markets rather than its traditional third‑quarter slot. The company estimated that, had Prime Day remained in the third quarter, revenue would have been about 4% higher.
Overall, the combination of a modest earnings miss, a cautious revenue outlook, and broader market skepticism about AI spending contributed to the sharp sell‑off in Amazon’s stock. Investors will be watching the upcoming earnings call for further guidance on how the company plans to balance its AI investments with profitability expectations in the coming quarters.
Helene Elliott is the Lead Science & Space Reporter at News Raise. She reports on aerospace missions, astrophysics discoveries, quantum research, and environmental technology.
