Amazon share price rise stalls despite AWS re-acceleration and AI investment surge
The e-commerce giant reported 13% sales growth to $180.2bn with AWS accelerating to 20.2% growth, though massive capex increases weigh on free cash flow, stalling Amazon’s post Q3 earnings rally.
Strong Q3 performance pushes shares to record high
Amazon.com has entered a potentially transformative phase following its third-quarter results, released on 30 October 2025. The company reported a 13% year-over-year (YoY) rise in net sales to $180.20 billion, or 12% excluding favourable currency effects.
Amazon Web Services (AWS) delivered a re-acceleration to 20.2% growth, reaching roughly $33 billion in revenue, easing concerns about competitive pressures.
Operating income landed at $17.4 billion but was weighed down by a $2.5 billion FTC settlement and around $1.8 billion in severance-related charges.
Adjusted for these items, operating profit would have exceeded $21 billion, demonstrating strong underlying operational performance.
Massive capital investment reshapes cash flows
Net income rose to $21.2 billion, up sharply from $15.3 billion a year earlier, reflecting operational leverage and revenue growth across multiple business segments.
Free cash flow was notably lower at $14.8 billion on a trailing-twelve-month basis, partly due to a dramatic increase in capital expenditure, which grew by more than $50 billion YoY.
Amazon ramped up investment in infrastructure, artificial intelligence (AI) hardware and logistics capabilities to support its aggressive growth plans.
Operating cash flow, however, improved 16% to more than $130 billion, underscoring underlying business strength despite the capital-intensive investment programme.
Market reaction validates strategic direction
The market welcomed the quarterly results with enthusiasm. The Amazon share price rose around 15% post-results - taking it to its $258.60 early November record high.
This was driven by beats in revenue, earnings and AWS performance that exceeded analyst expectations across multiple metrics.
Amazon year-to-date line chart
Since then, no follow through has been seen, though, with the Amazon share price range trading in the $250.00 region as investors digest the implications.
AWS remains the company's most critical engine of profitability and growth, and its renewed momentum helped to ease concerns about competitive positioning.
Diversified growth across business segments
Advertising, third-party seller services and international market expansion added to the diversified growth profile, suggesting a broader recovery across Amazon's ecosystem beyond just cloud services.
Analysts highlighted that cloud growth above 20% for a segment of AWS's scale is a meaningful signal that demand for AI-related workloads and advanced compute services continues to intensify.
Strategically, Amazon used the quarter to highlight the scale and breadth of its AI ambitions across both infrastructure and consumer applications.
The company confirmed that its Trainium2 AI chips were fully reserved and saw 150% quarter-over-quarter (QoQ) growth, demonstrating strong customer adoption.
AI investments span infrastructure and applications
Amazon launched Project Rainier with nearly half a million Trainium2 chips, introduced new EC2 instances built on Nvidia's Grace Blackwell architecture and expanded power-capacity availability.
Alongside this infrastructure investment, consumer-facing AI tools such as the Rufus shopping assistant and generative AI listing tools for sellers began rolling out in more markets.
Amazon also continued to broaden its media and entertainment offering, with higher engagement on Thursday Night Football, new global NBA coverage and expanded cloud-gaming options via Luna.
These initiatives demonstrate Amazon's multi-pronged approach to AI, spanning both enterprise infrastructure and consumer applications.
Re-rating potential depends on execution
Amazon's valuation narrative hinges on its ability to execute during an investment-intensive period. Amazon appears poised for a re-rating, provided that AWS growth accelerates into the low-20% range or better.
Advertising remains strong with growth above 20% and the company's substantial investments in AI and infrastructure begin translating into operating efficiency and margin expansion.
If all goes well, fundamental analysts believe the stock could reasonably trade towards the $280.00–$300.00 range or higher over the next 12-18 months.
Yet the trajectory is far from guaranteed given the sheer magnitude of spending and elevated execution risk.
According to LSEG Data & Analytics 19 analysts have a ‘strong buy’, 50 a ‘buy’ and 3 a ‘hold’ recommendation with a mean long-term price target at $288.62, up 18% from current levels (as of 14/11/2025).
Amazon LSEG Data & Analytics chart
TipRanks has a Smart Score of ’10 Outperform’ and a ‘strong buy’ rating for Amazon.
Amazon TipRanks Smart Score chart
Amazon share price technical analysis
Since the beginning of November the Amazon share price – up around 8% year-to-date - has been consolidating below its early November $258.60 record high whilst being supported by last week’s $238.49 low. Together with the July and September highs at $238.85-to-$236.53 it may offer support.
Amazon daily candlestick chart
In case of support down to $236.53 giving way, the late October third quarter (Q3) post-earnings gap may get filled down to $228.44.
The medium-term uptrend will remain valid while the next lower August and October lows at $211.42-to-$211.03 underpin on a weekly chart closing basis.
It has to be noted, though, that negative divergence on the weekly Relative Strength Index (RSI) points to potentially sharp correction taking place since the record high hasn’t been confirmed by a higher high on the oscillator, indicating weakness in the late October-to-early November rally.
Amazon weekly candlestick chart
Critical metrics for 2026 outlook
The key metrics to watch in 2026 will be AWS revenue growth, operating margin and EBIT margin (especially excluding one-time charges), advertising growth rates, and free cash flow trends.
Capex intensity and management's broader commentary on cost discipline will determine whether Amazon can successfully move from heavy reinvestment into sustained margin expansion.
Should AWS growth falter, should margin improvement stall or should free cash flow remain constrained by capex, Amazon's premium valuation could work in the opposite direction.
These indicators will determine whether Q3 2025 marked the beginning of Amazon's next major growth chapter or simply represented exceptional quarterly performance.
Investment considerations for transformation story
For investors considering Amazon following the strong Q3 results, the company presents both substantial growth potential and significant execution risks.
- Research Amazon's AI strategy, AWS competitive positioning, and capital allocation approach to understand the transformation opportunity and associated risks.
- Consider how cloud market dynamics, advertising growth, and operational efficiency might affect Amazon's ability to convert investment into profitability.
- Open an account with IG by visiting our website and completing the application process.
- Search for 'Amazon.com Inc' or its ticker 'AMZN' on our trading platform or app.
- Implement appropriate risk management given technology stock volatility and the binary nature of large-scale strategic investments.
Spread betting and CFD trading provide flexible approaches for trading Amazon around earnings.
For longer-term investors, share dealing offers direct ownership in the transformation story.
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