Amazon delivered a mixed financial picture to Wall Street on Thursday, posting third-quarter results that disappointed investors even as its cloud computing business accelerated sharply. The company reported net income of $20.69bn, or $1.89 per share, for the three months ended 30 September, below analyst expectations of $1.97 per share. Sales rose to $201.94bn from $180.17bn in the same period last year, falling short of analyst forecasts for $202.2bn. Shares fell more than 6% in after-market trading as investors focused on weakness in the core business.
The standout performer was Amazon Web Services, the company's cloud computing division, which posted its fastest growth in nearly five years. AWS sales jumped 39.3% during the latest quarter, up from 37% growth in the previous three-month period. Despite this strength, the company struck a cautious tone on the crucial fourth quarter, which covers the holiday shopping season. Amazon forecast fourth-quarter sales of between $240bn and $247bn, representing growth of 12% to 16% compared with the year-ago period. Analysts had expected $244.16bn in sales, putting Amazon's guidance below market expectations.
The disappointing outlook comes as Amazon continues to pour vast sums into artificial intelligence infrastructure. Chief executive Andy Jassy disclosed in July that the company now expects capital spending, mostly on artificial intelligence alongside robots, semiconductors and satellites, to total $220bn for the full fiscal year. This represents a jump from the $200bn investment plan announced in February and more than double the $128bn the company spent on capital projects in the prior year. Jassy attributed the increase partly to higher costs for memory chips and said that even at the $220bn level, Amazon will lack sufficient capacity to meet all customer demands.
Amazon's caution on holiday sales contrasts with its planned hiring surge for the shopping period. The company said it would employ 300,000 US seasonal workers for the season, up from 250,000 last year. Broader concerns about artificial intelligence spending are weighing on the technology sector. Alphabet reported weaker-than-expected summer growth this week and disclosed free cashflow concerns after spending more than $51bn on property and equipment. The company's share price plummeted on Thursday, erasing half a trillion dollars from its market value.
For British investors and savers with exposure to Amazon through pension funds and investment portfolios, the company's mixed results and cautious sales guidance suggest profit growth pressures may persist despite record cloud computing expansion.