By Radarr Africa Business Desk
LAGOS, November 2 (Radarr Africa) – Amazon’s cloud unit grew 39 per cent in the third quarter, its fastest pace in nearly five years according to TechFlow, but record artificial intelligence spending of US$77.3 billion in the quarter and negative free cash flow pushed the company’s shares lower after the results, SiliconANGLE reported.
The company reported adjusted earnings per share of US$1.89, below the US$1.96 that Wall Street had targeted, and revenue of US$201.94 billion, up 12 per cent from a year earlier and slightly below a consensus of US$202.31 billion, according to SiliconANGLE. Net income was US$20.69 billion, against US$21.19 billion a year earlier, a period that included a US$9.5 billion pre-tax gain from Amazon’s investment in Anthropic.
Operating income rose to US$28.1 billion, above a forecast of US$26.2 billion. Amazon Web Services (AWS) revenue was US$45.98 billion, up 39 per cent and slightly above the US$45.9 billion analysts expected. Online sales rose 2 per cent to US$68.47 billion, below a forecast of US$69.68 billion, and advertising revenue rose 11 per cent to US$19.64 billion, below the US$20.82 billion forecast.
Capital expenditure was US$77.3 billion, against an estimate of US$58.7 billion and US$35.1 billion a year earlier, SiliconANGLE reported. Amazon reiterated its 2026 capex forecast of US$220 billion, and free cash flow was negative US$42.4 billion. Chief financial officer Brian Olsavsky attributed the higher spending to purchases of property and equipment for AI investments.
For the fourth quarter, Amazon guided to revenue of US$240 billion to US$247 billion, whose midpoint trails the US$244.5 billion consensus, the report said.
Chief executive Andy Jassy said Amazon plans to “spend more meaningfully in 2027”, SiliconANGLE reported, adding that the company has a clear line of sight to attractive financial returns. He expects AWS growth to exceed 40 per cent within the next year and in fiscal 2028, and said AWS could exceed US$1 trillion in annual revenue within five to 10 years. He also said the Trainium and Graviton chip business is growing at triple-digit rates, and that Trainium is due to be offered to external customers near the end of next year.
Tracy Woo, an analyst at Forrester, said AWS’s results stood out and that cloud competition is shifting toward access to scarce AI resources rather than price, according to SiliconANGLE.
The article said Microsoft lowered its 2026 capex forecast to US$170 billion from US$175 billion, while Alphabet kept its forecast of US$195 billion to US$205 billion.
TechFlow, a market-news service, reported that AWS has an annualised run rate of US$184 billion and a backlog of US$578 billion, and that Microsoft’s Azure grew 48 per cent. It put Amazon’s operating margin at a record 13.9 per cent.
Amazon said it moved Prime Day into the second quarter in several countries to avoid a clash with the FIFA World Cup, which it said weighed on retail and advertising results, SiliconANGLE reported.
Amazon’s shares fell more than 7 per cent in after-hours trading on Thursday, according to SiliconANGLE. They also fell during Friday’s session, when US stocks closed sharply lower, with the Nasdaq down 2.86 per cent, TechFlow reported.
