Alphabet sheds half a trillion in market value, Intel's stock falls 20%.
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Amazon still plans US$220b in capital expenditure this year, mainly on investments in artificial intelligence. Image / Getty Creative
Amazon shares fell more than 7% in after-hours trading after a quarterly earnings report that missed analyst expectations on profit and total revenue but showed strong growth in the company’s AWS cloud business.
The miss came as investors were already rattled by Google’s own lower-than-expected profits on a slowdown
in advertising and big spending on AI (artificial intelligence).
Shares in Google parent Alphabet dropped more than 10% after market close on Wednesday (US time) and closed down more than 12% on Thursday, erasing around US$500 billion ($875b) in market value in the tech giant’s largest one-day fall following the profit miss it posted the day before on slowing ad revenue growth.
Intel meanwhile tumbled 20% after the bell on Thursday after it said it expected a protracted slowdown for personal computers. The segment has come under pressure from soaring memory prices due to shortages caused by the AI-fueled data centre boom. Intel said it expected the pressure to remain into 2028.
The chipmaker reported a third-quarter profit of US$3.32b from its year-ago US$4.06b. The US Government took a 10% stake in Intel last year as part of a plan to onshore a portion of Intel’s manufacturing.
Amazon still expects to focus US$220b on capital expenditures this year, mainly on investments in artificial intelligence.
The company recorded US$201.9b in total revenue and US$20.7b in profit in the third quarter, below expectations of US$202.2b and US$21.5b, respectively, according to FactSet.
Revenue from advertising services also fell short, reaching US$19.6b versus US$20.8b expected.
Amazon touted potentially lucrative business segments which extend beyond e-commerce, including grocery through Whole Foods, health care and pharmacy services, its Leo internet satellite division and Zoox autonomous vehicles.
“There has never been a trillion-dollar revenue business, and we may have two of them in the next five to 10 years,” CEO Andy Jassy said, echoing comments from July when he said that AWS was “booming”.
The company is well positioned to benefit from the AI race because of its early lead in cloud computing services through AWS, which remains the top provider globally, followed by Microsoft Azure and Google Cloud.
Amazon said in July that its AI cloud and chips businesses each “exceeded” US$25b annual revenue run rates, a measure of recurring sales, representing “triple-digit” percentage growth.
Demand for its proprietary Trainium chips is “strong”, and Amazon intends to make them more broadly available late next year, Jassy said on a call with analysts on Thursday.
