Amazon Shares Drop After Third-Quarter Report as AI Spending and Core Business Weigh on Sentiment

Amazon shares lost roughly 7% after hours following the quarterly report. Some coverage described AWS results as modest and advertising growth as weak. Guidance was also softer than hoped. Together these disappointed Wall Street, even though the company issued an upbeat cloud forecast.

Commentators tied the reaction to the scale of AI infrastructure spending. That spending is linked to free cash flow outflows and overshadowed strong cloud growth. The slide came on the heels of a tech selloff sparked by Alphabet's remarks on AI spending. Alphabet sank about 13% after disappointing earnings, and Intel lost roughly 20% in extended trading, hurt by a weak PC market.

Wider markets were mixed. Nasdaq futures were down about 1.8%, while in the prior session the S&P 500 lost 0.3% and the Stoxx 600 gained 0.8%. Treasury yields and gold also declined, a rare combination of moves.

If investors doubt that heavy AI investment will pay off soon, they may cut their near-term expectations for cash flow and earnings. That could keep pressure on Amazon and other large technology names in the coming days.