Amazon shares fall 7% on earnings miss; analysts see upside in AWS growth
Amazon shares fell nearly 7% in premarket trading Friday after the company missed third-quarter earnings and revenue expectations, reporting $1.89 per share against a $1.96 consensus and $201.94 billion in revenue versus a $202.31 billion estimate. Analysts largely recommend buying the dip, citing accelerating Amazon Web Services growth of 39% year-over-year, the second-highest quarterly increase in AWS history, and management's guidance for 40%+ growth through 2028. Firms including Morgan Stanley, Deutsche Bank, and Goldman Sachs lowered or adjusted price targets but still see 30-60% upside from Thursday's close. The stock decline reflects investor concern over Amazon's massive AI capital expenditures, including a $75.9 billion quarterly capex and a trailing 12-month free cash flow outflow of $42.4 billion, though analysts note strong backlog growth and AI revenue rising triple digits.