Amazon Stock Drops After Earnings Miss as Jim Cramer Urges Buy
- Amazon shares dropped after reporting quarterly revenue of $201.94 billion.
- Earnings per share reached $1.89, missing the analyst estimate of $1.97.
- Jim Cramer recommended buying Amazon, calling it one of the best companies in the world.
- AWS revenue grew 39.3% to $46 billion with a record $578 billion backlog.
- Wall Street is currently evaluating if record AI spending is generating actual revenue.
Amazon stock prices declined after the company reported quarterly revenue of $201.94 billion, which missed the consensus estimate of $202.31 billion.
Shares dropped from $253.82 to $229 within an hour of the filing, later closing the next session at $240.35, a decline of 1.41%. Amazon released these results following the market close on Thursday.
Amazon reported its third-quarter earnings.
The dot-com bubble reached its peak on March 10, 2000. Driven by the adoption of the internet and the World Wide Web, the Nasdaq Composite index saw a 600% increase in investments between 1995 and March 2000. By October 2002, the Nasdaq Composite index had declined by 78% from its peak, erasing all the gains made during the bubble period.
Jim Cramer recommends buying Amazon stock
CNBC host Jim Cramer recommended buying Amazon stock on October 30. He said, “I think that Amazon should be bought right here, because before people realize that it remains one of the best companies in the entire world, I like to say there’s always a bull market somewhere”.
Cramer maintained this bullish stance on the company as of November 1, 2026.
AWS revenue grows 39.3 percent with strong backlog
Amazon Web Services revenue grew 39.3% to $46 billion with a 38.7% operating margin. This performance marks the sixth consecutive quarter of accelerated growth for the cloud division.
The AWS backlog reached $578 billion. CEO Andy Jassy projected AWS growth to exceed 40% in both 2027 and 2028.
Token volume on the AWS AI model platform Bedrock increased nearly 17 times year over year.
Company faces rising interest expenses and capital expenditure
Amazon provided fourth-quarter sales guidance of $240 billion to $247 billion, falling below analyst estimates at the midpoint. Interest expense reached $1.691 billion, up from $538 million in the same period a year earlier.
The company has a $220 billion capital expenditure plan. Amazon has not provided a date for when it expects to recover free cash flow.
Analysts maintain positive targets despite valuation concerns
Amazon trades at approximately 34 times trailing earnings. The company has a forward multiple of roughly 23 times based on the 2027 consensus earnings per share of $10.55.
UBS raised its price target for the stock to $352 from $348, citing the outlook for Amazon Web Services. This adjustment follows a period where the stock has risen 4.13 percent for the year.
Wall Street scrutinizes AI spending across cloud providers
Wall Street is currently evaluating whether Azure or Amazon Web Services can prove that record artificial intelligence spending generates actual revenue. Both cloud providers experienced growth acceleration in the previous quarter.
Alphabet stock fell 10 percent after Wall Street determined that open-ended artificial intelligence spending is no longer acceptable.
Historical trends show post-earnings volatility
Amazon stock has historically fallen over the 30-day period following each of its two most recent earnings reports.
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