Amazon shares drop 5% as AI spending weighs on core retail business

Amazon shares fell over 5% in after-hours trading Thursday after reporting quarterly results below expectations, following similar market reactions to Meta and Google. The e-commerce giant's core online retail business showed weak growth, with net sales reaching $202 billion in Q3, up 12% year-over-year but slightly missing forecasts. Amazon also projected disappointing holiday activity and reported an unprecedented negative free cash flow of $42 billion over the past year due to massive AI infrastructure investments. Amazon Web Services sales grew 39%, the strongest increase in five years, yet investors remain concerned about profitability of future AI spending. This pattern mirrors broader tech industry trends, with Microsoft and Google cloud businesses growing 30% and 102% respectively, though traditional segments lag.