Amazon has given a careful sales forecast for the final three months of 2026, and the news worried investors even though its cloud business had its best growth in almost five years. The company's shares fell more than 6% in after-hours trading on Thursday, October 29, 2026, after the results were released.
The forecast covers the holiday shopping season, the most important time of the year for retailers. Amazon said it expects sales of between $240 billion and $247 billion in the fourth quarter. That is 12% to 16% higher than the same period last year, but the middle of the range sits below what Wall Street had expected. Analysts had forecast about $244 billion.
The cautious outlook raised fresh questions about how much shoppers will spend this holiday season. Higher household costs and rising prices are putting pressure on family budgets, and retailers are watching closely to see whether customers will tighten their spending.
Third-quarter results fall short of expectations
For the third quarter, which ended on September 30, 2026, Amazon reported sales of $201.94 billion, up from $180.17 billion a year earlier. Net income was $20.69 billion, or $1.89 per share, down slightly from $21.19 billion, or $1.95 per share, in the same quarter last year.
Analysts had expected earnings of $1.97 per share on sales of $202.2 billion, according to FactSet. The small miss was enough to send the stock lower, as investors focused on the core shopping business rather than the headline growth.
Cloud business grows at its fastest pace in nearly five years
The bright spot in the report was Amazon Web Services, the company's cloud computing division. AWS sales rose 39.3% in the quarter to about $46 billion, up from 37% growth in the previous quarter. It was the fastest growth rate for the unit in nearly five years.
Investors have been watching Amazon's cloud results closely to see whether its huge spending on artificial intelligence is starting to pay off. The company is building data centres and buying computer chips to meet demand for AI services, and that spending has grown sharply.
Chief executive Andy Jassy told investors in July that Amazon now expects capital spending, mostly on AI, to reach $220 billion this year. That covers robots, semiconductors and satellites. It is up from a $200 billion plan announced in February, and far above the $128 billion spent last year. Jassy said higher memory chip prices were the main reason for the increase, and warned that even $220 billion may not be enough to meet all demand this year.
Similar worries have hit other big technology companies. Google's parent company Alphabet reported weaker growth than expected on October 28, and said its purchases of property and equipment had topped $51 billion in the quarter.
Holiday hiring and a brighter industry forecast
Despite the cautious outlook, Amazon is preparing for a busy holiday season. Earlier in October it said it would hire 300,000 seasonal workers in the United States, up from 250,000 last year. The company has also been rolling out faster delivery services and expanding into more rural areas to win new shoppers.
Not all forecasts are gloomy. The National Retail Federation, a US industry group, predicted earlier in October that total US holiday sales would rise 4.2% from last year. That suggests shoppers are still expected to spend, even if they are more careful with their money.
The coming weeks will show which view is right. Amazon's fourth-quarter results, due early next year, will reveal whether the cautious forecast was wise planning or an early warning of a slow holiday season for online retail.
Voice shopping gets a holiday upgrade
On the same day as the earnings report, Amazon also announced more than 100 new shopping features for Alexa, its voice assistant. Shoppers can now build gift lists, manage baby registries, and control subscriptions by voice, for example by saying "skip my next delivery" or "pause my subscription".
Users can also update delivery instructions, ask about billing questions such as "where is my refund?", and get answers about Prime or Audible subscriptions. Amazon says more than 400 million people have used Alexa for shopping in the past year.
The move shows how Amazon is trying to make shopping easier ahead of the holidays, even as it warns that overall sales growth may be slower than hoped.
What it means for shoppers and sellers
For shoppers, the message is mixed. Amazon is investing heavily in faster delivery and new shopping tools, but rising costs mean deals and discounts may matter more than ever this holiday season. For investors, the key question is now whether Amazon's huge AI spending will turn into lasting profits. The cloud business is growing fast, but the shopping business faces a tougher consumer mood. The next few months will test both sides of the company at once.
Sources
- Reuters, "Amazon projects fourth-quarter sales below estimates" (October 29, 2026) — 985theriver.com
- Transport Topics, "Amazon offers cautious holiday-quarter outlook" (October 29, 2026) — ttnews.com
- TechCrunch, "Amazon updates Alexa to help you manage shopping lists and subscriptions and update delivery instructions" (October 29, 2026) — techcrunch.com
- PYMNTS, "Amazon Adds 100-Plus Capabilities to AI Shopping Assistant" (October 29, 2026) — pymnts.com
- Traders Union, "Amazon expands Alexa shopping tools ahead of holiday season" (October 29, 2026) — tradersunion.com
Note: Social-media checks (Instagram, Facebook, Threads) on October 30, 2026 confirmed wide discussion of Amazon's Q3 results; no X post was found that could be cited, so no X reference is included above.
