Amazon keeps profit margins in Orbit

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Subscribe to enjoy similar stories. Like its big tech rivals, Amazon.com is spending a king’s ransom on artificial intelligence. Unlike them, it also has plenty of customers dropping money on toothpaste and razorblades.

That strange brew proved a potent mix for the company’s third-quarter report Thursday. Amazon reported an eye-popping $22.6 billion in capital expenditures for the quarter—a new high and an 81% jump year-over-year that exceeded even the substantial capex increases posted by Microsoft, Meta Platforms and Google’s parent, Alphabet, for the same period. Analysts had been expecting Amazon’s spending to rise 42% to about $17.6 billion for the third quarter, according to data from FactSet.

Investors haven’t been taking such surprises well of late; Meta and Microsoft saw their share prices slide around 4% and 6%, respectively, on Thursday following their reports for the quarter. But Amazon had some good news in store too: Total revenue grew 11% from a year earlier, beating Wall Street’s targets and marking an acceleration from the 10% pace shown in the June quarter. Amazon credited demand for “everyday essentials" products for helping lift sales.

And the company’s operating profit came in at $17.4 billion, nearly 19% above analysts’ projections. Amazon’s share price jumped more than 5% in after-hours trading Thursday. Amazon projected an operating income range of $16 billion to $20 billion for the fourth quarter, the midpoint of which exceeded analysts’ estimates by 4%.