Amazon Shares Fall on Profit Miss Despite AWS Boost

Quick Answer: Amazon reported third-quarter profit of US$20.7 billion, below the US$21.5 billion expected, according to FactSet, and its shares fell. Its cloud arm AWS accelerated, and the company still plans US$220 billion in capital expenditure this year, mostly on AI. Amazon is not a Bursa Malaysia counter, so Malaysian investors track it through overseas markets.

Why Did Amazon’s Profit Miss Drag Its Shares Lower?

Amazon profit miss and AWS cloud business shares — Amazon’s third-quarter results fell short of expectations, pressuring its shares.

Amazon posted US$201.9 billion in total revenue, against US$202.2 billion expected. Profit of US$20.7 billion missed the US$21.5 billion consensus, according to FactSet.

Advertising revenue was another shortfall, reaching US$19.6 billion versus US$20.8 billion expected. That miss hit as investors were already rattled by lower-than-expected profit at Alphabet.

Alphabet shares fell more than 10% after market close on Wednesday and closed down more than 12% on Thursday. Intel tumbled 20% after the bell on Thursday, after warning of a protracted slowdown for personal computers.

Amazon Shares Fall on Profit Miss Despite AWS Boost — Photo: Free Malaysia Today

How Is AWS Performing in Amazon’s AI Cloud Race?

Amazon said in July that its AI cloud and chips businesses each “exceeded” US$25 billion in annual revenue run rates, representing “triple-digit” percentage growth. AWS remains the top cloud provider globally, followed by Microsoft Azure and Google Cloud.

Demand for its proprietary Trainium chips is “strong”. Amazon intends to make them more broadly available late next year, Jassy said on a call with analysts on Thursday.

Jassy said in a statement: “There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years.” He had said in July that AWS was “booming”.

How Big Is Amazon’s US$220 Billion Capex Plan?

Amazon still expects to spend US$220 billion on capital expenditures this year, primarily on artificial intelligence investments. That spending is the number shareholders need to track against the profit shortfall.

Rivals are funding the same race with debt. Microsoft raised US$25 billion through a bond sale, and Alphabet, Meta, Nvidia and SpaceX have also borrowed billions. Bloomberg puts AI-related debt at US$335 billion globally this year.

Meta said last week it would raise capital through a new stock offering to fuel its AI spending. Investors are now watching whether these outlays pay off.

How Many Jobs Has Amazon Cut in Its Efficiency Drive?

Amazon: 16,000 jobs cut worldwide in January, after 14,000 cuts last year.
Microsoft: voluntary buyouts offered to a quarter of its workforce this week, after an early retirement buyout for around 7%.
Meta: around 10% of its global workforce laid off in May.
Uber: around 10% of staff, or an estimated 3,000 or more, to be laid off, as announced in September.
Netflix: around 6% of its workforce to be cut this year, reportedly.
eBay: 1,000 employees laid off earlier this month.

What Does Amazon’s Profit Miss Mean for Its Shareholders?

On the reported figures, Amazon’s net margin works out to about 10.3%, against roughly 10.6% implied by expectations. That gap is small, but the market reacted sharply to it.

Amazon is not listed on Bursa Malaysia, so Malaysian investors gain exposure only through an overseas broker. Check any broker’s fees and account requirements before trading. The key figures to monitor are AWS growth, the US$220 billion capex budget and the Trainium rollout timeline. For broader AI-stock research, see our AI Stock Analysis for Malaysians guide.

Key Takeaways

Amazon’s third-quarter profit was US$20.7 billion, below the US$21.5 billion expected.
Advertising revenue of US$19.6 billion fell short of US$20.8 billion expected.
AWS remains the top cloud provider globally, and AI cloud and chips each exceeded US$25 billion run rates.
Amazon still plans US$220 billion in capital expenditure this year.

This article is for general information only and is not a recommendation to buy, sell or hold any security. Do your own research before making any investment decision.

Frequently Asked Questions

Did Amazon miss profit estimates in its latest quarter?

Yes. Amazon reported third-quarter profit of US$20.7 billion, below the US$21.5 billion expected, according to FactSet.

How much will Amazon spend on capital expenditure this year?

Amazon still expects to spend US$220 billion on capital expenditures this year, primarily on artificial intelligence investments.

Is Amazon listed on Bursa Malaysia?

No, Amazon is not a Bursa Malaysia counter. Malaysian investors would need access to an overseas market through a broker, so check the fees and account requirements first.

What is AWS and why does it matter for Amazon shares?

AWS is Amazon’s cloud computing business, and it remains the top cloud provider globally, ahead of Microsoft Azure and Google Cloud. Its AI cloud and chips businesses each exceeded US$25 billion in annual revenue run rates, according to Amazon.

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