Amazon Stock Plunges After Hours: AWS Surges 39% — and Cash Flow Burns $33.5 Billion

Amazon's cloud business just grew 39% — its fastest pace in nearly five years — and investors sold the stock anyway. Shares fell about 6% in early after-hours trading on Thursday, October 29, tumbled as much as 12.5% at the low, and were still down around 7% later in the session. The reason was not demand. It was the bill: Amazon burned $33.5 billion of free cash flow in a single quarter to build AI data centers, and that one number overwhelmed a record operating profit.

What happened

Amazon reported third-quarter earnings after the close on Thursday. Net sales rose 12% year over year to $201.9 billion, just shy of the roughly $202.2 billion Wall Street expected. Earnings per share came in at $1.89, below the $1.97 consensus and down from $1.95 a year earlier. Operating income, by contrast, hit a record $28.1 billion, up sharply from $17.4 billion a year ago, helped by the cloud division.

Amazon Web Services was the clear bright spot. AWS sales jumped 39% to $46.0 billion — 39.3% on some measures — beating analyst estimates and marking its fastest growth in nearly five years. The problem sat elsewhere: the retail business that made Amazon famous underperformed expectations, advertising came in light, and the company paired the report with a cautious outlook for the holiday quarter, guiding fourth-quarter sales to between $240 billion and $247 billion.

Why it is blowing up

The number traders kept sharing was free cash flow. Amazon's outflow was $33.5 billion in the third quarter alone, more than four times the roughly $7.7 billion outflow analysts had expected. Over the past twelve months, free cash flow has swung to an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier. Quarterly capital spending exploded to $77.3 billion, up 43% from $54.2 billion in the second quarter, and Amazon held its full-year capital expenditure plan at about $220 billion.

To help pay for the buildout, Amazon raised about $48.1 billion of new long-term debt during the quarter. Its long-term debt has nearly tripled since December to roughly $173 billion, and quarterly interest expense has more than tripled to about $1.7 billion. That is why a 39% cloud surge did not save the stock: investors are now asking when the AI spending turns back into cash, not whether the cloud can grow.

The timing made the reaction bigger. A day earlier, Alphabet fell about 13% in Thursday's regular session after its own report showed huge AI spending and negative free cash flow, dragging the Nasdaq Composite down 1.38%. Amazon had already closed Thursday down 4.25% at $243.79 before its report landed. Two of the world's biggest cloud companies delivering the same message in 48 hours — growth is strong, cash is leaving faster — turned a single earnings miss into a market-wide argument about the price of AI.

Key facts

• Sales: $201.9 billion, up 12%, just below the ~$202.2 billion expected.
• EPS: $1.89, versus $1.97 expected and $1.95 a year ago.
• AWS: $46.0 billion, up 39% — the fastest growth in nearly five years.
• Operating income: a record $28.1 billion, up from $17.4 billion.
• Free cash flow: -$33.5 billion in Q3; -$42.4 billion over twelve months.
• Spending: $77.3 billion of capex in the quarter; ~$220 billion planned for the year.
• Guidance: fourth-quarter sales of $240 billion to $247 billion, described as cautious and light.
• Stock: down about 6% early after hours, as much as 12.5% at the low, and around 7% later in the session.

Sources: The Motley Fool, Barron's, ZeroHedge, TradingKey and Transport Topics.

What is next

Friday's regular session will show whether the after-hours slide holds once the full market can trade the news, and Amazon's earnings call guidance on spending will matter as much as the numbers already out. The bigger question hanging over the stock is simple: AWS growing at 39% is proof the AI demand is real, but with capex held at $220 billion and debt climbing, investors want a date when the cash starts coming back. Until Amazon gives them one, strong growth alone may not be enough to lift the shares. This report describes what happened and why markets reacted; it is not a recommendation to buy, sell or hold any security.

FAQ

Why did Amazon stock fall after earnings?

Amazon missed on earnings per share and sales, guided cautiously for the holiday quarter, and reported a $33.5 billion quarterly free-cash-flow outflow driven by AI data-center spending.

How fast did AWS grow in Q3 2026?

AWS sales rose 39% to $46.0 billion, its fastest growth pace in nearly five years, and ahead of analyst estimates.

How much is Amazon spending on AI infrastructure?

Capital spending was $77.3 billion in the third quarter alone, and Amazon kept its full-year capital expenditure plan at about $220 billion.

What did Amazon guide for the fourth quarter?

Amazon guided fourth-quarter sales to between $240 billion and $247 billion, a cautious outlook that came in light versus what investors wanted.