Key Highlights

● AWS Revenue rose 39% to about $46 billion, slightly ahead of expectations.

● Quarterly capex hit $77.3 billion; trailing free Cash Flow swung to minus $42.4 billion.

● Shares were down about 6.6% pre-market after closing 4.25% lower on Thursday.

● Brokerage views split, with price targets cut, raised and described as an overreaction.

Amazon (NASDAQ:AMZN)'s cloud unit delivered the kind of quarter growth investors have been asking for, yet the stock is still heading for a rough Friday open. Amazon Web Services revenue climbed 39% from a year earlier to about $46 billion in the third quarter, slightly ahead of the roughly $45.7 billion analysts expected, according to Earnings coverage on Thursday night.

AWS Operating Income came in at $17.8 billion, according to market data. CEO Andy Jassy said "Our AWS Investment in functionality and infrastructure is working," and projected AWS growth above 40% in both 2027 and 2028.

The market is looking past that. Amazon shares were down 6.64% in pre-market trading in a 7:30 a.m. ET Friday brief, and down 6.85% in an 8:09 a.m. ET update, after already closing 4.25% lower in Thursday's regular session before the report.

Why the spending bill is the story

The reason is cash. Amazon's capital expenditures reached $77.3 billion in the quarter, compared with $35.1 billion a year earlier, according to market data. Trailing twelve-month free cash flow swung to an outflow of $42.4 billion, from an inflow of $14.8 billion a year ago. The company held its 2026 capex plan at about $220 billion.

For investors, that means the AI build-out is now consuming far more cash than the Business generates. One report cited "weak forward guidance added to investor concerns over massive AI capital expenditures." Fourth-quarter sales guidance of $240 billion to $247 billion put the midpoint slightly under consensus, and the operating income range of $28.5 billion to $33.5 billion also centered below estimates, according to earnings coverage.

The rest of the quarter didn't give bulls much to lean on. Earnings Per Share of $1.89 missed the roughly $1.97 estimate, and revenue of $201.9 billion came in just short of forecasts. Amazon said shifting Prime Day into the second quarter trimmed third-quarter growth by about 4 percentage points.

Wall Street splits as the Nasdaq-100 feels the weight

Analysts reacted in different directions on Friday morning. One brokerage kept its Overweight rating but cut its price target to $280 from $310, according to market data. Headlines showed another brokerage raising its target to $335, citing AWS growth, while a third lowered its target to $345 on valuation. A headline said a fourth brokerage described the sell-off as a "Spend-Scare Overreaction." The full notes from those brokerages were not available.

Before Friday's changes, market data listed a "Moderate Buy" consensus with an average target of $325.16. That is well above Thursday's $243.79 close, which suggests many analysts still see the decline as tied to timing and spending rather than to a broken business.

Amazon is one of the largest weights in the Nasdaq-100, so its slide matters for the whole index. Nasdaq-100 futures were down about 2.5% to 2.6% before the open on Friday, as Amazon and Intel (NASDAQ:INTC) added to worries about AI spending a day after Alphabet (NASDAQ:GOOGL)'s record one-day drop. One senior market analyst said that "Amazon and Intel have now added to the uncertainty."

Rates add pressure too. The Federal Reserve held rates this week after a September hike, futures pricing points to a possible December increase, and the 10-year Treasury Yield is near 4.94% to 4.99%. That makes long-dated payoffs from AI infrastructure harder to value.

What could change the story

The main risk is that capex keeps rising faster than AWS revenue, pushing free cash flow further negative into 2027. The upside case rests on Jassy's forecast of AWS growth above 40% and on AI capacity turning into contracted revenue.

At the open, watch whether buyers step in near the overnight lows and whether more analysts follow the brokerages that stayed constructive. After that, the focus turns to next Friday's jobs report and to Amazon's holiday-quarter results, which are not yet scheduled.