Key Highlights

● AWS Revenue of $45.98 billion beat the $45.29 billion expected.

● Trailing 12-month free Cash Flow swung to negative $42.4 billion.

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

● Amazon reaffirmed its $220 billion 2026 capex plan.

Amazon (NASDAQ:AMZN) saw its Amazon Web Services unit post its fastest growth in years, but a soft holiday forecast and a sharp swing in free cash flow sent the shares tumbling in extended trading on Thursday.

A second leg down

Amazon was already having a bad day before it reported. The stock fell in Thursday's regular session, closing at $243.79 on October 29, according to market data, as Alphabet (NASDAQ:GOOGL)'s historic plunge rattled investors in Big Tech.

After the bell, things got worse. Amazon's shares dropped sharply in extended trading following its third-quarter report. Estimates of the decline varied over the evening: one source cited a price near $226.91, while another said the stock was down even more steeply at its worst before trimming losses.

AWS shines

The quarter had genuine bright spots. Amazon Web Services, the company's Cloud Computing arm, generated $45.98 billion in revenue, beating the $45.29 billion expected. One headline said it was AWS's fastest growth in about five years. Amazon also posted a record operating margin.

Total revenue reached $201.94 billion, roughly in line with or slightly below the consensus of about $202.1 billion to $202.3 billion. Earnings of $1.89 a share fell short of the roughly $1.96 analysts expected.

Chief executive Andy Jassy struck an expansive tone. "There has never been a trillion dollar revenue business, and we may have two of them in the next 5 to 10 years," he said, according to market data.

The cash-flow problem

The concerns were about money going out the door. Amazon reaffirmed its 2026 capex plan of $220 billion, much of it aimed at data centers and the infrastructure behind AI. Trailing 12-month free cash flow swung to negative $42.4 billion, from positive $14.8 billion a year earlier.

That swing landed on the same day that Alphabet's negative free cash flow sparked its worst session since its 2004 IPO, erasing about $500 billion in market value. Media reports said Alphabet's results "reignited concerns over mounting AI costs," and Amazon's figures fed the same worry.

One market analyst said that "markets are no longer rewarding companies simply for investing heavily in AI."

A soft holiday forecast

Guidance added to the pressure. Amazon forecast fourth-quarter revenue of $240 billion to $247 billion. The midpoint fell short of the roughly $244.3 billion to $244.5 billion consensus, a disappointment heading into the critical holiday shopping season.

Futures feel the pain

Amazon's slide, together with Intel (NASDAQ:INTC)'s after-hours plunge on weak guidance, pushed Nasdaq-100 futures lower in evening trading, according to market data. Dow futures, by contrast, edged up.

During the regular session, the Nasdaq Composite had already tumbled 365.13 points to 26,184.72, and the Nasdaq-100 fell to 29,402.51. Consumer discretionary, Amazon's sector, was one of only three S&P 500 groups to decline. Yet more than 400 S&P 500 stocks rose, and the Russell 2000 climbed 28.71 points to 2,859.22.

What to watch

Friday's regular session will reveal how deep Amazon's after-hours decline runs once full Volume returns. Investors will weigh the AWS acceleration and record margin against the cash-flow swing and soft holiday guide.

The broader question is whether the market will keep punishing heavy AI spenders. Microsoft (NASDAQ:MSFT), which showed lighter capex and strong cash flow, held roughly flat on Thursday, while Alphabet collapsed. Amazon's fate may depend on convincing investors that its $220 billion bet will pay off. Friday's Employment Cost index and the Fed's December 8 to 9 meeting add a rates backdrop.