Amazon just reported its third-quarter earnings, which show it\u2019s now the latest AI hyperscaler to disappoint the market with below-expectations revenue and a spiraling cash burn.<\/p>\n
The company\u2019s free cash flow sank to a negative $42.4 billion, a huge drop compared to the $7.5 billion cash burn reported in the previous quarter, and an even greater drop compared to the $14.8 billion that was flowing into the company at the same time last year. The cash drop was driven primarily by a $94.8 billion jump in property and equipment purchases related to the company\u2019s investments in artificial intelligence, Amazon said. The company expects to spend $220 billion this year, again driven in large part by AI investments.<\/p>\n
But while Amazon hemorrhages cash for AI, its revenue also failed to match up to analyst expectations. The tech giant reported $201.9 billion in revenue, up 12% since last year. That result was below analyst estimates,\u00a0the Wall Street Journal<\/a> reported.<\/p>\n The results also showed subpar revenue for its advertising and retail segments, a sign for many investors of a stumble in Amazon\u2019s core business. Amazon\u2019s chief financial officer Brian Olsavsky noted that Prime Day shifted dates this year, so the sales mostly occurred during the company\u2019s second fiscal quarter. Amazon brass argued that last year it was during the third quarter, which slightly impacted the year-over-year growth.<\/p>\n Amazon was the last hyperscaler to report in this round of tech earnings. So far, of the four hyperscalers<\/a>, only Microsoft<\/a> has reported positive free cash flow. Incidentally, Microsoft was also the only one of the four that enjoyed a rise in its shares following the release of its earnings report. Meta\u2019s stock was down more than 2% in early morning trading after reporting negative free cash flow of $2.12 billion. Shares of Google parent company Alphabet, which reported a negative free cash flow of $9.07 billion on Wednesday evening, just had their worst day ever<\/a> on Thursday at a 12% decline. Amazon\u2019s shares were down roughly 7% on Thursday evening after the report.<\/p>\n On the earnings call, Amazon CEO Jassy defended the company\u2019s AI strategy, saying that Amazon is \u201cvery well positioned for what\u2019s happening in AI.\u201d Jassy cited initiatives like Trainium, the company\u2019s custom-designed AI accelerator chips that are seeking to challenge Nvidia\u2019s AI chips dominance<\/a>, and Bedrock, Amazon\u2019s AI model marketplace.<\/p>\n Jassy also touched on AI shopping agents, which have been gaining traction (particularly since Meta launched Muse<\/a> last month). Some experts believe that agentic shopping can pose a danger to Amazon\u2019s advertising business<\/a>, but Jassy was adamant that\u2019s not the case.<\/p>\n \u201cFew customers are doing much shopping this way yet, as the experience is still not great, nor more convenient than coming to a retailer directly to research or one-click order there,\u201d Jassy said. But when it comes to their in-house agentic shopping assistant, Alexa for Shopping, Jassy sounded more confident about adoption. He said that customer interactions with the tool were up 570% year over year.<\/p>\n \u201cU.S. customers using Alexa for Shopping are spending 50% more per order than those who don\u2019t,\u201d Jassy said. \u201cThough we anticipate working with horizontal agents, we believe Alexa for Shopping is going to be the primary shopping agent customers use to shop Amazon.\u00a0Having a shopping assistant constantly by your side as you browse, get inspired, have questions on product detail pages, and that you can simply ask to buy something based on your prior purchases that already has your history, your shipping address, and payment info is uniquely helpful and convenient for customers.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Amazon just reported its third-quarter earnings, which show it\u2019s now the latest AI hyperscaler to disappoint the market…\n","protected":false},"author":2,"featured_media":951720,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,971,276,277,5875,49,48,46,192,103388,281,63,176,61],"class_list":["post-951719","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-amazon","tag-artificial-intelligence","tag-artificialintelligence","tag-aws","tag-ca","tag-canada","tag-economy","tag-google","tag-hyperscalers","tag-meta","tag-microsoft","tag-stocks","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/951719","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=951719"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/951719\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/951720"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=951719"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=951719"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=951719"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}