Key Highlights

● Amazon shares tumbled after hours on October 29, falling to about $226.91 at one point.

● Fourth-quarter sales guidance of $240 billion to $247 billion had a midpoint below consensus.

● AWS Revenue rose to about $46.0 billion, ahead of the $45.29 billion expected.

● Trailing-12-month free Cash Flow was negative $42.4 billion against positive $14.8 billion a year earlier.

AWS posted its fastest growth in years, but an Earnings miss, a holiday-quarter sales guide below consensus and deeply negative free cash flow sent Amazon (NASDAQ:AMZN) sliding in extended trading.

A rough evening after a rough day

Amazon had already fallen during Thursday's regular session, closing at $243.79 as investors braced for its report. After the bell, the selling deepened. Shares of Amazon tumbled in after-hours trading on October 29, at one point falling to about $226.91, according to market data. Another source said the stock was down even more steeply at its worst after hours before paring some of the losses.

Reports of the after-hours move varied widely depending on when they were taken, as is typical for extended trading. All agreed it was a significant decline.

The guidance gap

The headline disappointment was the holiday quarter. Amazon guided fourth-quarter sales to $240 billion to $247 billion. The midpoint of that range came in below the roughly $244.5 billion consensus. For a company whose fourth quarter is its biggest of the year, a guide that falls short sets a cautious tone heading into the holiday shopping season.

Earnings also missed. Amazon reported EPS of $1.89, below the $1.97 analysts expected. Net sales reached $201.9 billion, an increase from a year earlier.

AWS shines

The cloud Business was the bright spot. AWS revenue rose to about $46.0 billion, ahead of the $45.29 billion analysts expected, and one headline described it as the fastest growth in roughly five years. Amazon also posted a record operating margin, and it said it expects AWS to grow even faster in 2027 and 2028.

Chief executive Andy Jassy struck an ambitious note: "There has never been a trillion dollar revenue business, and we may have two of them in the next 5 to 10 years."

The cash question

The number that worried investors most may have been free cash flow. On a trailing-12-month basis, it was negative $42.4 billion, compared with positive $14.8 billion a year earlier. Amazon kept its 2026 capex plan at $220 billion, much of it for AI and data centres.

That landed on a day already dominated by worries about the cost of AI. Alphabet (NASDAQ:GOOGL) suffered its worst day since its 2004 IPO after negative free cash flow of $9.07 billion, and one report said its results "reignited concerns over mounting AI costs." One market analyst said "markets are no longer rewarding companies simply for investing heavily in AI."

Futures feel it

Amazon's slide, along with Intel (NASDAQ:INTC)'s after-hours plunge, pushed Nasdaq-100 futures and S&P 500 futures lower Thursday evening, according to market data, while Dow futures edged up.

During the regular session, the S&P 500 slipped 23.59 points to 7,720.39 and the Nasdaq Composite lost 365.13 points to 26,184.72. More than 400 S&P 500 members rose, and the Russell 2000 gained 28.71 points to 2,859.22. Amazon's pre-report decline weighed on consumer discretionary, one of only three sectors to fall.

What to watch

Friday's regular session will reveal how much of the after-hours drop holds once full trading resumes. Investors will scrutinise management's commentary on holiday demand, AWS capacity and the timeline for free cash flow to recover.

The bigger question is how the market weighs AWS's acceleration against the cost of building it. Microsoft (NASDAQ:MSFT), which one report said delivered "a big cash-flow beat," offers a contrast. Friday also brings the Employment Cost Index, and the Federal Reserve's December 8–9 meeting, where futures lean toward a hike, remains a key backdrop for consumer spending and big-spending technology companies.