Key Takeaways
- Amazon shares fell 2% today after a third-quarter miss on revenue and earnings and a $42.4 billion free cash outflow over the past twelve months.
- CEO Andy Jassy expects to spend meaningfully more in 2027, a boost for Nvidia and a harder test for CoreWeave.
- AWS grew 39%, its fastest pace in nearly five years, and Amazon’s operating margin hit a record.
- Amazon’s forward P/E is near a five-year low, which looks too pessimistic while AWS keeps accelerating.
Amazon (AMZN) shares are down 2% today after its third-quarter report missed on revenue and earnings, and free cash flow swung to a $42.4 billion outflow over the past twelve months.
CEO Andy Jassy said on the earnings call that Amazon expects to “spend meaningfully more in 2027.” That’s more business for Nvidia (NVDA), which sells Amazon its GPUs, and raises a hard question for CoreWeave (CRWV), which borrows heavily to build ahead of its revenue.
The miss, and the bright spot
- Revenue rose 12% to $201.9 billion and earnings per share came in at $1.89, short of FactSet’s consensus of $202.2 billion and $1.97. (Prime Day’s earlier timing cost about 4 points of growth.)
- AWS revenue rose 39% to $46.0 billion, its fastest growth in nearly five years.
- Operating income jumped 61% to $28.1 billion, a record 13.9% margin.
But Amazon spent $75.9 billion on property and equipment last quarter, and long-term debt has climbed to $173.1 billion from $65.6 billion at the end of 2025. Here’s what the build-out has done to free cash flow:
The September quarter made it worse: a $42.4 billion outflow over the past twelve months, against a $14.8 billion inflow a year earlier.
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Good for Nvidia, tougher for CoreWeave
Jassy’s bigger 2027 budget should mean more orders for Nvidia, whose data center revenue rose 117% to $89.0 billion in its latest quarter. The catch: Jassy also said commitments for Amazon’s own Trainium chips have grown more than 20 times. How much of 2027’s spending goes to Nvidia? Nvidia reports on Nov. 17.
CoreWeave has a harder version of Amazon’s problem. It lost $626 million in the second quarter on $2.6 billion of revenue, with interest expense alone at $640 million. If investors punish Amazon, record margin and all, for spending ahead of cash flow, will they be patient with CoreWeave when it reports next month?
Priced for the cash burn
Amazon traded at 27x forward earnings at Thursday’s close, against a five-year average of 49x:
Today’s drop takes it to about 25x, below February’s five-year low of 26x.
My take: that price weighs the cash burn more heavily than AWS’s growth, which Jassy projects will top 40% in both 2027 and 2028. That’s too much pessimism.
It all hinges on 2027’s bill. If the capex outlook due with fourth-quarter results in early February outruns AWS’s growth, the discount could stick.
So what is Amazon stock actually worth?
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