Amazon stock fell 7.30% in after-hours trading on Thursday to $225.99 from its $243.79 close, pushing the share price below the lowest price target among 42 Wall Street analysts tracked by TipRanks. The sharp decline followed third-quarter earnings and revenue results that missed consensus estimates as spending on artificial intelligence infrastructure continued to accelerate.
Soaring AI Spending Drives Cash Outflows
Amazon reported earnings per share of $1.89, falling short of the $1.96 LSEG consensus estimate. Net revenue reached $201.9 billion, missing the expected $202.3 billion. Free cash flow registered a negative figure for the second consecutive quarter, with 12-month trailing outflows expanding to $42.4 billion from $7.6 billion a year earlier.
Capital expenditures surged as property and equipment investments hit $77.3 billion, up from $35.1 billion in the prior-year period. Meanwhile, long-term debt grew to $173.1 billion, compared to $65.6 billion recorded at the end of 2025. Fourth-quarter operating income guidance arrived at a $31 billion midpoint, coming in below the $33 billion consensus expectation.
AWS Outperforms While Retail and Ads Miss
While Amazon Web Services (AWS) grew revenue 39% year-over-year to roughly $46 billion, other divisions dragged down overall performance. Online store sales rose 2% to $68.5 billion, missing StreetAccount estimates of $69.7 billion. Advertising revenue grew 11% to $19.6 billion, falling short of the $20.8 billion projection.
CEO Andy Jassy defended the infrastructure commitments, stating, "Our AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenue growth in Q3 ($184 billion revenue run rate) and projected revenue growth rates of over 40% both in 2027 and in 2028." The AWS backlog grew 16% in the quarter to $578 billion, paralleling recent trends where Amazon AWS backlog reached $578B alongside heavy spending.
Wall Street Targets and Bear Market Levels
The after-hours decline to $225.99 left Amazon below the lowest price target of $230 among TipRanks' 42 tracked analysts, who maintain 40 Buy, 2 Hold, and 0 Sell ratings with an average price target of $332.26. Morgan Stanley analyst Brian Nowak recently set a bear case price target of $220. If regular trading confirms a close at or below $227.20, the stock will sit 20% below its August 3 record high of $284, entering formal bear market territory.
Key Takeaways:
- Amazon stock fell 7.30% after hours from $243.79 to $225.99.
- EPS of $1.89 and revenue of $201.9 billion missed analyst estimates of $1.96 and $202.3 billion.
- Trailing 12-month free cash outflow expanded to $42.4 billion while property and equipment spending hit $77.3 billion.
- AWS revenue grew 39% to $46 billion with a backlog of $578 billion, but Q4 operating income guidance midpoint of $31 billion missed expectations.
Why It Matters
Amazon's post-earnings decline highlights Wall Street's growing impatience with mega-cap tech companies trading short-term margins for long-term AI position. While AWS continues to generate impressive top-line acceleration, escalating property expenditure and negative cash flows present structural risks if enterprise AI adoption slows down. Investors will closely watch whether Friday's regular session triggers further sell-offs or establishes strong support near Morgan Stanley's $220 bear target.
