Updated Version 3-Resend-Amazon Stock Price Falls as Q4 Sales Forecast Disappoints and Cash Burn Accelerates

Supplemented with analyst comments, financial details, and company background, updated stock price data; updated paragraphs 2, 5-7, and 11, and added chart

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Reuters, October 29 - Amazon.com (AMZN.O) on Thursday reported massive cash outflows for the third quarter and forecast holiday season revenue would generally fall short of Wall Street expectations, triggering a stock price decline.

Investor sentiment toward the company has cooled, causing its stock to drop nearly 7% in after-hours trading. The share had already fallen 4.3% during the regular session to close at $243.79.

According to LSEG compiled data, the Seattle-based retailer expects Q4 revenue between $240.0 billion and $247.0 billion, compared to analysts’ average forecast of $244.51 billion. The company stated that as of the quarter ending September, cumulative cash outflow for the past twelve months reached $42.4 billion, mainly driven by $77.26 billion in capital expenditures—an amount about $20 billion higher than expected, according to LSEG compiled data.

Amazon had a cash outflow of $7.6 billion in the previous quarter, while Q3 last year generated a cash flow of $14.8 billion.

“Free cash flow appears to be the worst part of this report,” said Dave Wagner, portfolio manager at Aptus Capital Advisors. “Operations are generating a lot of cash, but capital expenditures are completely devouring it.”

“The trend is quite steep and very negative, which is the most concerning aspect of this report.”

Like its rivals, Amazon has poured significant funds into AI software and infrastructure development, with capital expenditures expected to reach $220 billion this year. While Microsoft (MSFT.O) lowered its capex guidance from $175 billion to $170 billion on Wednesday, Amazon and Google’s parent Alphabet (GOOGL.O) maintained their previous spending forecasts.

Investing.com senior analyst Jesse Cohen also noted that Amazon’s free cash flow and “soft guidance” were reasons for the share price drop. “Amazon’s Q3 earnings were a double disappointment.”

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Cloud Business Drives Growth

According to LSEG compiled data, in the third quarter ending September, Amazon Web Services (AWS) revenue rose 39% to $46 billion, while analysts had forecast growth of 38.2% to $45.61 billion. AWS posted a 37% revenue increase in the second quarter.

The company also maintained its approximately $220 billion annual capital expenditure forecast.

Advertising sales were also disappointing, rising just 12% year-on-year to $19.6 billion, below LSEG’s estimate of 18%—the first time in seven quarters the figure has missed analyst estimates. This growth is well below the 26% increase in Q2 and 22% in Q3 2025.

The pessimistic Q4 outlook suggests that, with rising gasoline prices and increasing living costs, consumers are tightening their budgets, putting U.S. retailers at risk for the holiday shopping season.

Nonetheless, recent industry forecasts still show holiday sales will grow from last year. Earlier this month, the National Retail Federation predicted that U.S. holiday season total sales will rise by 4.2%.

While retail business still accounts for most of Amazon’s income, in recent years investor attention has shifted dramatically toward its cloud computing business—Amazon Web Services (AWS)—as the tech company spends heavily expanding data centers and participating in the global AI race.

Amazon’s cloud business achieved its fastest growth in nearly five years.

In its e-commerce business, Amazon has continued to roll out faster delivery services worldwide and expand to more rural areas in the U.S. to attract more consumers.

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