Amazon and Intel Drop After Hours as Guidance Disappoints

Amazon and Intel both fell in after-hours trading Thursday after quarterly reports that disappointed investors on guidance and headline expectations, extending a rough day for technology stocks.

Amazon reported net sales of 201.9 billion dollars in the third quarter, up 12 percent from a year earlier, but just short of Wall Street’s forecasts of about 202.2 billion dollars. Diluted earnings per share came in at 1.89 dollars, below the 1.97 dollars expected. Net income fell to 20.7 billion dollars from 21.2 billion dollars a year earlier, a decline Amazon attributed mainly to 9.5 billion dollars in pre-tax investment gains recorded in the year-earlier quarter.

The cloud business was the bright spot. Amazon Web Services revenue jumped 39 percent to 46.0 billion dollars, beating estimates, and AWS operating income rose to 17.8 billion dollars from 11.4 billion dollars. Total operating income climbed to 28.1 billion dollars from 17.4 billion dollars, beating estimates and producing a record operating margin of 13.9 percent. North America sales rose 6 percent to 112.9 billion dollars, and international sales rose 5 percent to 43.1 billion dollars.

What weighed on the shares was the outlook and the spending bill. Amazon guided fourth-quarter net sales to between 240 billion and 247 billion dollars and operating income to between 28.5 billion and 33.5 billion dollars, with both midpoints below consensus. Capital spending reached 77.3 billion dollars in the quarter, and Amazon kept its full-year cash capital spending plan at about 220 billion dollars. Trailing 12-month free cash flow swung to an outflow of 42.4 billion dollars, compared with an inflow of 14.8 billion dollars a year earlier, as purchases of property and equipment rose 94.8 billion dollars, largely for artificial intelligence infrastructure. Shares fell about 6 percent in after-hours trading, after closing 4.25 percent lower at 243.79 dollars in the regular session.

Intel’s report told a similar story of a decent quarter overshadowed by a weak forecast. Revenue grew 21 percent to 16.51 billion dollars, roughly in line with expectations, and adjusted earnings per share of 52 cents beat the 41 cents expected. Profit fell to 3.32 billion dollars, or 60 cents a share, from 4.06 billion dollars, or 90 cents a share, a year earlier.

The data center and artificial intelligence segment surged 78 percent to 7.3 billion dollars, and the foundry business grew 58 percent to 6.7 billion dollars. The client computing and physical AI group, which sells processors for personal computers, saw revenue fall 5 percent to 8.1 billion dollars.

The forecast did the damage. Intel projected fourth-quarter revenue of 15 billion to 16 billion dollars and adjusted earnings of 25 cents a share, far below expectations of about 17 billion dollars in revenue and 43 to 45 cents in earnings. The company also guided to an adjusted gross margin of 38 percent, about five points below forecasts. Chief Executive Lip-Bu Tan cited headwinds in the personal computer market, and Chief Financial Officer David Zinsner projected the PC slowdown would last through at least the first six months of 2027. The company also cited production disruption following a fatal explosion at one of its facilities in Israel earlier this month. Shares fell about 17 percent in after-hours trading to 76.85 dollars, after closing 3.6 percent lower at 92.07 dollars in the regular session. The stock has more than doubled this year through Thursday’s close.

The two reports landed on a day when the Nasdaq Composite had already fallen 1.38 percent, dragged by Alphabet’s record 12.64 percent plunge. Together, the results reinforced the market’s new test for technology companies: cloud and chip growth is rewarded, but only when the core business holds up and the cost of building artificial intelligence capacity looks manageable.

This article reports market movements and is not investment advice.