Amazon Shares Sink Over 5% on Earnings Miss, Softer Than Expected Q4 Sales Guidance

Amazon reported net sales of $201.9 billion and a profit of $1.95 per share, compared to net sales of 202.26 billion and a profit of $1.96 per share expected by Wall Street analysts, per Yahoo Finance. The tech giant also reported softer than expected net sales guidance of $240 billion to $247 billion in the fourth quarter Shares fell more than 5% in after-hours trading on Thursday Amazon shares fell over 5% in after-hours trading on Thursday after the company missed Wall Street expectations in the third quarter and gave softer-than-expected guidance for the fourth quarter. The tech giant reported a 12% increase in total net sales to $201.9 billion and a profit of $20.7 billion, or $1.89 per share, compared to net sales of $202.26 billion and a profit of $1.96 per share expected by analysts. It also issued softer than expected guidance for the fourth quarter, projecting net sales between $240 billion and $247 billion, or growth between 12% and 16%, due to a negative impact from foreign exchange rates. In addition, fourth-quarter operating income is expected to come in between $28.5 billion and $33.5 billion, while ad revenue growth is expected to be in the high-teens. It also continues to expect $220 billion in capital expenditures due to higher memory costs, with the majority going towards AI and Amazon Web Services. In July, CEO Andy Jassy said there was a “clear line of sight to strong financial returns” on its AI bet and predicted that AWS could eventually become a trillion dollar annual revenue business due to “striking” demand for the technology. Advertising services revenue, which includes sales to sellers, vendors, publishers, authors and others through programs such as sponsored ads, display and video advertising, grew 12% to $19.64 billion, though the segment’s growth was pressured by “timing anomalies” primarily related to Prime Day. That was offset by a 39% increase in AWS sales to $46 billion. Net sales in the subscription services segment, which includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book and other non-Amazon Web Services subscription services, also rose 12% to $14 billion. During the quarter, Amazon signed new AWS agreements with companies including Meta, Nvidia, OpenAI, Salesforce, Oracle, Qualcomm, Verizon and more. It also introduced its AI-powered Ads Agent to help support advertisers with insights, answers and the ability to take action on their behalf using trillions of shopping, browsing, and streaming signals. The feature also launched full funnel campaigns for all U.S. advertisers, bringing sponsored ads, display, video, and streaming TV into a single campaign. Entertainment highlights during the quarter include the fifth season of Thursday Night Football on Prime Video, which saw its best start ever and a 16% increase over last year’s full-season average with an average of 17.7 million viewers through six games and the debut of the second season of the NBA, which more than doubled last-year’s full season average with over tw0 million U.S. viewers in its season-opening doubleheader. “Reacher” Season 4 also drew 66 million viewers in its first 28 days and Amazon MGM Studios exceeded $1.2 billion in global box office so far in 2026. In April, Amazon Chief Financial Officer Brian Olsavsky said that Prime Video has grown into a “larger and profitable business in its own right.” The streaming service’s ad tier reaches over 315 million monthly active users globally, including more than 130 million in the United States alone. Other countries where the ad tier is available include Australia, Austria, Brazil, Canada, France, Germany, India, Italy, Japan, Mexico, New Zealand, The Netherlands, Spain, Sweden and the U.K. In addition to its ad-supported tier, Prime Video users can pay a fee of $4.99 per month to upgrade to an ad-free experience — an increase from its previous $2.99 per month fee. Starting in 2027, Prime Video will be home to the Emmys, bringing the telecast to more than 240 countries around the world. The exclusive deal, which runs through 2033, is worth around $15 million a year, an individual with knowledge previously told TheWrap. More to come…