Amazon’s (AMZN) stock plummeted over 8% in pre-market trading on Friday after the retail and cloud computing giant issued third-quarter sales guidance that fell short of analyst expectations.
The company projected sales between $154 billion and $158.5 billion for the upcoming quarter. This range is below the $158.43 billion forecasted by analysts, according to Bloomberg data.
The earnings report comes amidst a wave of disappointing results from major tech companies, highlighting investor concerns over extensive AI investments. Weaknesses in Amazon’s core business have intensified scrutiny from Wall Street.
Despite reporting earnings per share (EPS) of $1.26, surpassing estimates of $1.04 and nearly doubling profits from the same period last year, investor attention focused on the company’s shortcomings.
Amazon generated $148 billion in revenue, slightly missing the $148.8 billion anticipated by analysts. The company’s advertising segment, a consistent performer with double-digit growth, also underperformed, with revenue reaching $12.8 billion against an expected $13 billion.
A notable highlight was Amazon Web Services (AWS), which reported $26.3 billion in revenue, exceeding the $26 billion forecast and significantly up from $22.1 billion the previous year. AWS Chief Financial Officer Brian Olsavsky indicated that the division is on track to generate more than $105 billion annually.
Olsavsky further revealed that Amazon has invested over $30 billion in capital expenditures during the first half of the year, driven by increasing demand for AWS services and generative AI tools. This investment is expected to rise in the latter half of the year.
On the e-commerce front, Amazon faces heightened competition from low-cost rivals like Temu and Shein, which leverage direct-from-factory supply chains. In response, Amazon is reportedly developing a discount digital storefront to compete in the fashion and lifestyle segments.
“We are seeing cautious consumers,” Olsavsky noted. “They are looking for deals.”
The report also highlighted that Amazon’s revenue growth was hindered by softer consumer spending in a quarter between two major sales events—March’s Big Spring Sale and July’s Prime Day. eMarketer principal analyst Sky Canaves remarked, “Amazon will need to adjust its offerings and promotions to capitalize on trends, potentially with a new discount section ahead of the holidays.”
Amazon’s earnings report followed mixed results from other tech giants. Microsoft (MSFT) surpassed expectations on overall earnings but missed forecasts for cloud revenue, leading to a decline in its shares. Similarly, Alphabet (GOOG, GOOGL) experienced a drop after reporting lower-than-expected YouTube ad revenue. In contrast, Meta (META) received a positive response from Wall Street, reporting better-than-expected revenue and profit, despite warnings of significant capital expenditures in 2025. Apple (AAPL) also reported earnings that exceeded expectations, despite a decline in iPhone sales year-over-year.
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