Amazon's cloud crushes it, and Wall Street still dumps the stock

Amazon's third quarter looked like a victory lap on paper. Operating margin climbed to 13.9%, the highest in company history, and operating income jumped 61.15% to $28.08 billion. AWS revenue hit $46 billion, outpacing Microsoft's Azure at $33 billion and Google Cloud at $31 billion, according to Yahoo Finance. The cloud unit's growth accelerated to 39%, and its backlog ballooned to $578 billion.

The stock didn't care. Shares closed at $243.79 on October 29, then slid 6.72% to $227.40 in premarket trading, with CNBC framing the move as pressure mounting after earnings. Amazon is now down 9.18% over the past week and 7.81% over the past month, sitting about 20.8% below its 52-week high of $287.20.

Two accounting quirks muddied the headline numbers. Prime Day shifted into the second quarter, shaving roughly 400 basis points off growth, and the year-ago quarter carried $9.5 billion in Anthropic gains. Even so, revenue rose 12.09% to $201.94 billion — just shy of the $202.20 billion analysts wanted — while EPS of $1.89 missed the $1.9579 estimate.

What's spooking the market is the price tag for staying ahead: a $220 billion capital expenditure plan. CEO Andy Jassy isn't blinking. He projects AWS can grow north of 40% in both 2027 and 2028, starting from a $184 billion run rate, and pointed to Bedrock token volume climbing nearly 17 times, with revenue commitments for Trainium and Graviton chips each up more than 20 times.

At least one analyst sees a wide gap between the results and the selloff. 24/7 Wall St. carries a buy rating and a $377.20 price target over the next 12 months, implying 54.72% upside from the last close and about 65.9% from the premarket level. The next test is whether Wall Street starts pricing the AI buildout as fuel rather than a bill.