Amazon Shares Fell 7.3% After Earnings Report, Dropping Below Analysts' Lowest Target

Amazon shares fell by 7.30% after Thursday's trading, dropping to $225.99 from $243.79. The decline pushed the stock below $230 – the lowest of the 42 target prices tracked by TipRanks. The reason was a miss on earnings and revenue for the third quarter. Free cash flow was negative for the second consecutive quarter: outflows over 12 months expanded to $42.4 billion from $7.6 billion amid rising AI expenses. CNBC Investing Club noted that retail and advertising misses outweighed a strong AWS quarter.

Earnings per share were $1.89 against the LSEG consensus of $1.96. Revenue was $201.9 billion versus the expected $202.3 billion. Online store sales grew by 2% to $68.5 billion, falling short of the StreetAccount forecast of $69.7 billion. Advertising increased by 11% to $19.6 billion against the expected $20.8 billion. Capital expenditures reached $77.3 billion compared to $35.1 billion a year earlier, and long-term debt rose to $173.1 billion from $65.6 billion at the end of 2025. AWS revenue grew by 39% to approximately $46 billion and exceeded estimates, but according to CNBC, investors might have expected more after strong results from Microsoft and Alphabet.

The average analyst target is $332.26, about 47% higher than the closing price. Even the minimum target of $230 is above the current level; most of the 42 TipRanks targets were set before the report. Brian Nowak of Morgan Stanley this month outlined a bearish scenario of $220 – about $6 below the stock. Ratings are also on the side of the bulls: 40 Buy, 2 Hold, and none Sell.

The argument in favor of the targets is the company's own forecast. “Our investments in AWS functionality and infrastructure are working: revenue growth of over 39% year-over-year in Q3 (run rate $184 billion) and projected growth of over 40% in 2027 and 2028,” said Amazon CEO Andy Jassy. According to CNBC, analysts expect AWS growth of 35.47% in 2027 and 34.8% in 2028, while the AWS backlog grew by 16% to $578 billion. Meanwhile, the operating profit forecast for Q4 is $31 billion at the midpoint against a consensus of $33 billion, and Jassy expects significantly higher expenses in 2027.

Friday's trading will show if the decline holds: closing at $227.20 or lower will leave the stock at least 20% below the record $284 from August 3 – such a drop is usually considered a bear market. According to CNBC, at around $228, the shares have already erased all the 15% growth since the July report.