Amazon's AWS grew 39.3% on $48.1 billion of new debt, and the stock fell as much as 11%

After the bell on October 29, Amazon▼−10.87% — Amazon, down 10.87 percent today printed its fastest AWS growth in nearly five years, a 13.9% operating margin it calls the highest in its history, and a projection from Chief Executive Andy Jassy that the cloud unit grows more than 40% in both 2027 and 2028 ¹. The stock still fell more than 7% in early after-hours trading ⁴ and as much as 11% as the evening ran ². The same session, Alphabet▼−13.68% — Alphabet, down 13.68 percent today lost $482 billion of market value, the biggest one-day drop in its history↗ ³.

It cleared the Street and missed the whisper

AWS, Amazon's cloud division, sold $46.0 billion in the quarter, up 39.3% year over year, a $184 billion annual run rate, ahead of the 37.7% growth analysts expected, per TMT Breakout↗, a tech research service ¹². Revenue of $201.9 billion and earnings of $1.89 a share each came in just under estimates; the earnings miss sits below the operating line, in rising interest costs on Amazon's growing debt and the absence of last year's $9.5 billion gain on its AnthropicPVT$350B — Anthropic, private, latest valuation $350B stake ¹⁴⁵.

The bar that mattered sat higher. Large holders had whispered about 43% AWS growth and a 40% segment margin; the quarter printed 39.3% and 38.7%, the margin down from 39.4% in the second quarter ¹². The fourth-quarter guide, $240 billion to $247 billion of sales and $28.5 billion to $33.5 billion of operating income, left both midpoints under the Street ¹².

The growth is running on the bond market

Net capital spending ran $75.9 billion in the quarter against a $58.2 billion Street forecast, and the full-year plan held at about $220 billion ¹². Trailing free cash flow, the cash left after capital spending, swung to a record $42.4 billion outflow from a $14.8 billion inflow a year earlier, on a $94.8 billion jump in equipment purchases Amazon attributes primarily to AI ¹³.

The bridge is borrowing: $48.1 billion of long-term debt raised in the quarter alone, taking long-term debt to $173.1 billion at September 30 from $65.6 billion at the end of 2025 ¹. This publication reported Amazon's warning that AI stays free-cash-flow negative for years on October 19, and the $15 billion Anthropic loan against AWS capacity on October 27; tonight's filing↗ puts numbers on both ¹.

The bull case is printed, and so is the bill

Jassy's bull case sits in the release: AWS growth above 40% in both 2027 and 2028, and his line that there has never been a trillion-dollar revenue business and Amazon may have two of them in the next five to ten years ¹. Advertising, the other profit engine, grew about 11% to $19.6 billion against an 18% Street expectation; Amazon blames Prime Day timing and guides growth back to the high teens for the fourth quarter ¹²⁶.

The fall also cut about $8.2 billion from founder Jeff Bezos, who owns 8% of the company, on top of a 4.25% regular-session drop to $243.79 ⁵. Investors rewarded Microsoft▼−0.31% — Microsoft, down 0.31 percent today for 48% growth in Azure, its cloud platform, with spending held in check, and sold Amazon and Alphabet for spending past their cash flow ⁵⁷.

What the fourth quarter has to prove

Two readings decide the trade. Guidance implies about $47.8 billion of fourth-quarter capital spending, $17 billion below the Street's $64.8 billion; delivered, that step-down would slow the cash burn, which is why nobody is banking on it yet ². The 2027 budget stays unprinted, with buyside expectations near $325 billion to $350 billion against a Street figure around $287 billion ². AWS now compounds at 39% on borrowed money, and the bond market that lent $48.1 billion of it this quarter holds a claim on that growth before shareholders do ².