Amazon Stock Drops 7% in After-Hours Trading, Falls Below Key Analyst Target

Amazon shares declined 7.30% in after-hours trading Thursday, reaching $225.99 after closing at $243.79. That move pushed the stock beneath $230, the most bearish of 42 analyst price targets tracked by TipRanks.

The decline followed a third quarter where the company fell short on both earnings and revenue. Free cash flow remained negative for the second quarter in a row. The 12-month cash outflow expanded to $42.4 billion from $7.6 billion as artificial intelligence spending increased.

Amazon Disappointed on Key Metrics Investors Were Focused On

The CNBC Investing Club noted that weakness in retail and advertising overshadowed a solid performance from Amazon Web Services (AWS).

• Earnings per share were $1.89, missing the $1.96 LSEG consensus estimate.
• Revenue totaled $201.9 billion, below the $202.3 billion forecast.
• Online store sales increased 2% to $68.5 billion, falling short of the $69.7 billion StreetAccount projection.
• Advertising revenue grew 11% to $19.6 billion, lower than the $20.8 billion estimate.
• Spending on property and equipment reached $77.3 billion, up from $35.1 billion a year earlier.
• Long-term debt rose to $173.1 billion, compared with $65.6 billion at the end of 2025.

AWS revenue climbed 39% to roughly $46 billion, topping expectations. Still, the CNBC Investing Club said investors may have expected a larger quarter-over-quarter gain following strong cloud results from Microsoft and Alphabet.

Wall Street Targets Now Well Above the Current Stock Price

The stock's reaction widened the distance between Amazon's share price and analyst targets. Most of the 42 targets TipRanks follows were established before Thursday's report.

The mean target of $332.26 is roughly 47% above the after-hours price. Even the lowest target of $230 sits above it. Morgan Stanley's Brian Nowak set a bear case of $220 this month, about $6 below the stock.

The ratings are similarly bullish. TipRanks records 40 Buy ratings and 2 Hold ratings, with no Sell recommendations.

What Could Narrow the Gap

Amazon's own outlook provides the bullish case for those targets.

“Our AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenue growth in Q3 ($184 billion revenue run rate) and projected revenue growth rates of over 40% both in 2027 and in 2028,” Andy Jassy, Amazon CEO, stated in the release.

According to CNBC, analysts anticipate AWS growth of 35.47% in 2027 and 34.8% in 2028. The AWS backlog also increased 16% during the quarter, reaching $578 billion.

However, Amazon's fourth-quarter operating income guidance has a midpoint of $31 billion, below the $33 billion consensus. Jassy also expects meaningfully higher spending in 2027.

Key Levels for Friday's Trading

Friday's regular session will reveal whether the after-hours drop persists. A close at or below $227.20 would put the stock at least 20% under its $284 record close from August 3. Traders often consider a 20% decline from a peak to signal a bear market.

CNBC noted that around $228, the stock had already wiped out its entire 15% gain from July's earnings report.