NEW YORK — Amazon offered a cautious sales outlook for the current fourth quarter that encompasses the critical holiday shopping period after delivering fiscal third-quarter results that came in below Wall Street analysts' expectations.
The Seattle-based tech giant, however, posted strong sales growth in its prominent cloud computing unit. Sales in its so-called Amazon Web Services rose 39.3% to $46 billion during the latest quarter ended Sept. 30, higher than the 37% clip in the previous quarter. It marked the fastest growth rate in nearly five years, the company said.
Still, shares were down 7% in after-market trading when the results were released as investors focused on its core operations and worried about Amazon's burning through cash as it invests heavily in artificial intelligence.
Investors have been closely watching Amazon's quarterly earnings to see if the company's big spending on artificial intelligence is starting to pay off.
Amazon's CEO Andy Jassy told investors on the call Thursday that he still expects to spend $220 billion in capital this year, largely to build AI data centers. He believes that sales of its AWS unit will increase 40% each of the next two years, and the unit will ultimately become a $1 trillion-plus business in the next five to 10 years.
“The opportunity remains extraordinary,” Jassy told investors.
Jassy said Amazon is installing an AI chip about every 14 seconds and “almost as fast as we installed capacity.”
“Customers are gobbling it up,” he said.
But Amazon reported a free cash flow loss of $42.4 billion for the trailing 12 months as it makes big investments in AI.
In July, Jassy disclosed to investors that Amazon was increasing this year's capital spending on technology by an additional 10% to $220 billion. That number includes outlays on robots, semiconductors and satellites. That's up from the $200 billion investment plan announced in February and well above the $128 billion in capital spending for all of last year.
Worries are weighing on the entire AI industry following a big push to build data centers and fill them with AI chips.
The latest earnings report from Alphabet late Wednesday raised alarm bells when it reported weaker growth for the summer than analysts expected. The company behind Google and YouTube also said it burned through more cash during the latest quarter, after its purchases of property and equipment topped $51 billion. Its stock plummeted Thursday.
Amazon’s earnings report also comes as big tech giants promise to keep fewer secrets or invest more in communities willing to allow data centers as they face backlash from politicians and residents over their expansion.
Amazon said earlier this month that it will invest more than $1 billion over the next five years into communities where it operates data centers. The money will support education, job training, water and energy preservation projects and other local priorities, Amazon said.
Meanwhile, Amazon has been speeding up its order delivery times through a combination of robotics, AI technology and more efficient warehousing. In fact, speedier delivery helped Amazon dethrone Walmart in February from its status as the nation’s largest company by revenue.
Amazon executives said increased speed is fueling its grocery business, including perishables.
Amazon reported net income of $20.69 billion, or $1.89 per share, in the three months. That compares with $21.19 billion, or $1.95 per share, in the year-ago period.
Net sales rose 12% to $201.94 billion, compared with $180.17 billion from the same year-ago period. Amazon said sales were hurt by the shift in the calendar for the company’s big sales event Prime Day, which fell in the second quarter this year for most large countries, including the U.S.
In 2025, Prime Day occurred entirely during the fiscal third quarter.
Excluding this shift, third-quarter year-over-year sales growth would have been approximately 400 basis points, or 4%, higher, Amazon said.
Analysts were expecting $1.97 per share on sales of $202.2 billion, according to FactSet.
For the fourth quarter, Amazon said it expects net sales to fall between $240 billion and $247 billion, a 12% to 16% increase compared with the year-ago period. Analysts were expecting $244.16 billion.
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This story has been updated to correct that Amazon reported a free cash flow loss of $42.4 billion, not that cash flow fell to $42.4 billion.