Amazon falls 4.2% after third-quarter results that missed EPS and revenue expectations

What happened

Amazon (AMZN) fell 4.2% on October 29, 2026, because third-quarter results missed consensus on earnings per share and revenue and management warned fourth-quarter sales would be largely below Wall Street estimates. The company reported diluted EPS of $1.89 against $1.97 expected, 4.1% below estimates, and revenue for the four quarters through September 30, 2026, totaled $797.46 billion, up 15.4% from a year earlier. Management highlighted strong AWS demand, said capacity was sold out through 2027, and disclosed an initial rollout of its Leo satellite internet service this year, while reiterating a 2026 capex plan that kept investors cautious.

How big was the move

The stock fell 4.2% on the day and fell 2.6% over the last five sessions. It opened 3.0% below the previous close and traded at 2.0 times its 20-day average volume. The move was 2.4 times a typical daily move for this stock and the company’s beta of 1.51 indicates the stock tends to move more than the market. The Consumer Cyclical sector median rose 2.7% on the day, so the stock’s performance was 6.9 percentage points worse than the sector median. In the past five years the stock had 36 sessions with a decline of at least 4.2%; twenty trading days later the median result was a gain of 4.8%, and 21 of 36 were higher.

The technical picture

The stock sat 4.4% below its 20-day moving average and 4.3% below its 50-day moving average, while remaining 0.2% above its 200-day moving average. The 50-day average is above the 200-day average, a sign of an established uptrend, and the stock has spent 65 consecutive trading days above the 200-day average. The Relative Strength Index (14 days) stood at 41, in a neutral range between 30 and 70. The security was 15.1% below its 52-week high, had fallen 2.2% over one month and 10.2% over three months, yet rose 6.3% over one year, trailing the S&P 500 by 5.7 percentage points. Volatility was 28% annualized over 60 days, lower than 75% of its own readings over five years.

Fundamentals and valuation

For the four quarters through September 30, 2026, revenue totaled $797.46 billion, a 15.4% increase from a year earlier, and diluted earnings per share were $12.37, up 74.7% from a year earlier. Gross margin was 51.4%, compared with 50.0% a year earlier, and operating margin was 13.1%, up from 11.0% a year earlier. Free-cash-flow margin stood at 5.9% and return on invested capital was 8.5%. The balance sheet showed net debt of 0.8 times EBITDA and share count increased by 0.8% over one year. The stock traded at 19.7 times trailing earnings, the lowest reading of the past five years against a five-year median of 45.4 times earnings, with price to forward earnings at 19.0 times and a free-cash-flow yield of 1.8%.

Those figures underline a contrast for investors: rising profitability and stronger margins driven by AWS and North American retail, alongside a valuation that is low versus its recent history. Operating income rose 61% to $28.1 billion in the quarter and operating margin reached 13.9%, according to company results, signalling material gains in efficiency even as the company continues heavy spending on infrastructure.

Earnings and analyst expectations

Amazon’s last report on October 29, 2026, showed diluted EPS of $1.89 versus $1.97 expected, 4.1% below estimates. The company reported third-quarter revenue of $201.9 billion, up 12% year-over-year, and operating income rose 61% to $28.1 billion with operating margin reaching 13.9%, driven largely by AWS and stronger North American retail operating income. Consecutive quarters beating estimates stood at 0 and the average surprise over the last four reports was 70.4% above estimates. Typical two-day reactions after recent reports resulted in the stock falling 0.1%. The next report is scheduled for February 4, 2027.

Investors focused on management’s outlook and capital plans. Management said AWS capacity was sold out through 2027 and reiterated expectations of more than 40% AWS revenue growth in 2027 and 2028. At the same time, the company flagged softer retail demand and projected fourth-quarter revenue largely below Wall Street estimates, which contributed to the share-price decline despite stronger margins.

What to watch

• February 4, 2027: next quarterly earnings report date
• Management’s 2026 capex guidance of $220 billion and Q3 property and equipment investment of more than $77 billion
• AWS capacity sold out through 2027 and management’s expectation of 40%+ AWS revenue growth in 2027 and 2028
• Consensus price target of $328.90, 34.9% above the closing price, from 94 analysts with 88% rating Buy
• Trailing free cash flow reported at negative $42.4 billion and long-term debt of $173.1 billion