Amazon is scheduled to report third-quarter earnings after the bell on Thursday. Analysts surveyed by StreetAccount expect adjusted earnings per share of $1.96 and total revenue of $202.31 billion. StreetAccount also projects Amazon Web Services (AWS) revenue at $45.48 billion and advertising revenue at $20.82 billion.
AWS sales are predicted to grow 38%, marking the fifth consecutive quarter of revenue acceleration for the cloud segment. CEO Andy Jassy stated on an Andreessen Horowitz podcast last week that Amazon's cloud capacity is "largely sold out" for next year and has received significant commitments through 2028. Regarding spending, the company previously hiked its capital expenditure forecast for 2026 to $220 billion from $200 billion, while StreetAccount analysts expect Amazon's capex to exceed $280 billion in 2027.
The aggressive spending on AI computing power has impacted cash flow; in July, the company reported negative free cash flow of $7.6 billion for the trailing twelve months, a decline from $18.2 billion one year prior, and FactSet estimates predict a cash outflow of $9.9 billion for the current quarter. Despite the spending, Amazon has laid off over 57,000 staffers since 2022, representing roughly 16% of its corporate workforce, with smaller rounds of layoffs continuing this year. The company confirmed on Wednesday that it laid off fewer than 250 employees from its device software and services team to "operate more efficiently and better align with our product roadsmap."
In a move related to its platform, Amazon blocked Meta's Muse AI agent from shopping on its site, stating it was not given advance notice and never agreed to participate. The company has increased investment in its own tools, rebranding its Rufus AI shopping chatbot to Alexa for Shopping, which Amazon stated has been used by over 400 million shoppers, with agentic feature usage growing more than eight times since the start of the year. Deutsche Bank analysts noted that "We expect Amazon to eventually develop its own agentic shopping offering, with its proprietary purchase data and commerce infrastructure positioning it well."
