NEW YORK \u2013 Amazon offered a cautious sales outlook for the current fourth quarter that encompasses the critical holiday shopping period after delivering fiscal third-quarter results that came in below Wall Street analysts’ expectations.<\/p>\n
The Seattle-based tech giant, however, posted strong sales growth in its prominent cloud computing unit<\/a>. Sales in its so-called Amazon Web Services rose 39.3% to $46 billion during the latest quarter ended Sept. 30, higher than the 37% clip in the previous quarter. It marked the fastest growth rate in nearly five years, the company said.<\/p>\n Still, shares were down 7% in after-market trading when the results were released as investors focused on its core operations and worried about Amazon’s burning through cash as it invests heavily in artificial intelligence.<\/p>\n Investors have been closely watching Amazon\u2019s quarterly earnings to see if the company\u2019s big spending on artificial intelligence<\/a> is starting to pay off. <\/p>\n Amazon’s CEO Andy Jassy told investors on the call Thursday that he still expects to spend $220 billion in capital this year, largely to build AI data centers. He believes that sales of its AWS unit will increase 40% each of the next two years, and the unit will ultimately become a $1 trillion-plus business in the next five to 10 years.<\/p>\n \u201cThe opportunity remains extraordinary,\u201d Jassy told investors.<\/p>\n Jassy said Amazon is installing an AI chip about every 14 seconds and \u201calmost as fast as we installed capacity.\u201d<\/p>\n \u201cCustomers are gobbling it up,\u201d he said. <\/p>\n But Amazon said its free cash flow fell to $42.4 billion for the trailing 12 months as it makes big investments in AI.<\/p>\n In July, Jassy disclosed to investors<\/a> that Amazon was increasing this year\u2019s capital spending on technology by an additional 10% to $220 billion. That number includes outlays on robots, semiconductors and satellites. That\u2019s up from the $200 billion investment plan announced in February and well above the $128 billion in capital spending for all of last year. <\/p>\n Worries are weighing on the entire AI industry<\/a> following a big push to build data centers and fill them with AI chips. <\/p>\n The latest earnings report from Alphabet<\/a> late Wednesday raised alarm bells when it reported weaker growth for the summer<\/a> than analysts expected. The company behind Google and YouTube also said it burned through more cash during the latest quarter, after its purchases of property and equipment topped $51 billion. Its stock plummeted Thursday.<\/p>\n Amazon\u2019s earnings report also comes as big tech giants promise to keep fewer secrets or invest more in communities willing to allow data centers as they face backlash from politicians and residents over their expansion.<\/p>\n