Amazon stock drops as AI spending overshadows fastest cloud growth in five years

Amazon's stock fell sharply Thursday after the company reported massive third-quarter cash consumption and signaled higher capital spending next year, overshadowing its fastest cloud growth in five years. The e-commerce giant forecast fourth-quarter revenue between $240 billion and $247 billion, with a midpoint slightly below analyst estimates. Amazon spent $42.4 billion in cash over the trailing twelve months, driven by capital expenditures of $77.26 billion, about $20 billion above estimates. AWS revenue grew 39% to $46 billion, beating expectations, but advertising sales rose only 12% to $19.6 billion, missing forecasts for the first time in seven quarters. CEO Andy Jassy said 2027 investments would be "significantly higher" than 2026's planned $220 billion. The results reflect broader tech sector weakness, with Alphabet shares falling 12% and Intel dropping 23% after hours. Amazon's stock declined nearly 7% in extended trading. Jassy defended the strategy, saying AWS could reach $1 trillion in revenue within five years, while analysts cited disappointing guidance and cash flow concerns as key negatives.