Shares of Amazon fell as much as 9% in aftermarket trading Thursday after the tech giant reported third-quarter earnings that fell short of Wall Street analysts’ expectations.
Earnings per share were $1.89 on a diluted basis, down from $1.95 in the year-ago quarter, while total revenue climbed 12% to $201.9 billion. Analysts’ consensus forecasts called for earnings per share of $1.97 and revenue of $202.25 billion.
In its earnings release, Amazon noted that the profit decline was primarily the result of $9.5 billion in pre-tax gains in the third quarter of 2025 related to investments in AI mega-startup Anthropic.
In addition to these disappointing financial results, Amazon also said its fourth-quarter revenue would be between $240 billion and $247 billion, suggesting it has a chance of falling below the Street forecast of $244.5 billion.
Amazon stock fell below $230 after hours after falling 4% during the normal trading day. The after-hours decline improved to 6%, but shares were still lower ahead of a scheduled conference call with top executives early the next hour.
Investors punished technology stocks this week as they sought indications of returns from the sector’s heavy spending on artificial intelligence. A number of major players, including Google and its parent company Alphabet, Meta, Microsoft and Nvidia, are collectively investing hundreds of billions of dollars per year in AI development.
Alphabet shares plunged 12% on Thursday, a record decline for the large-cap issue wiping $500 billion in market value, after the company missed its third-quarter revenue targets and reported a slowdown in its core search business. Nvidia shares are down 6% over the past month amid growing skepticism, and Meta stock has suffered a 5% decline over the past week despite a strong quarterly earnings report last week.
Amazon’s web services unit, AWS, has invested heavily in AI, but CEO Andy Jassy said in the earnings release that that spending contributed to revenue growth of 39% in the quarter and an expected annual run rate of $184 billion. Revenues will increase by more than 40% in 2027 and 2028, he predicts. “Our AWS investment in features and infrastructure is working,” he said.
While bulls and bears will continue to argue over the ROI of AI spending, many disconcerting signs emerged in the full quarterly report. Advertising, which had increased by more than 20% each quarter in recent years, actually declined starting in the second quarter. It amounted to $19.6 billion, an increase of 12% compared to last year. In its Prime Video business, which has expanded its sports rights portfolio alongside other content investments, advertising has been a key part of the strategy since launching across all Prime titles in 2024.
At the top of Amazon’s earnings release was a cautionary note reminding investors that Prime Day, a major e-commerce mainstay, moved earlier this year and took place in the second quarter in most major countries. Last year and in previous years, it took place entirely during the third quarter. If this change had not occurred, Amazon estimated its revenue increase would have been about 4% higher.
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