Amazon Slides 3% as Alphabet’s 12% Plunge Raises Stakes for AWS Report; Meta Rises 3%, Microsoft Pulls Back
Alphabet's brutal selloff just raised the bar for Amazon's AWS report, and the question now is whether AWS margins and growth can hold up where a rival stumbled.
Caution is building around Amazon (NASDAQ:AMZN | AMZN Price Prediction) ahead of its upcoming third-quarter report, as a steep selloff in a fellow tech giant raises the bar for Amazon Web Services (AWS). Amazon stock is at $246.30 in midday trading, down 3%.
Among the other AI giants, Meta Platforms (NASDAQ:META) stock is at $629.16, up 3%. Microsoft (NASDAQ:MSFT) stock is at $522.92, down 2%.
Alphabet’s Selloff Raises the Bar for Amazon
Alphabet (NASDAQ:GOOGL) stock trades at $286.17, down 12%, after quarterly results that disappointed investors. Capital spending at Alphabet came to $51.36 billion, short of the $55.09 billion analyst consensus. Weighing on the bottom line, an $8.7 billion loss on equity securities pulled Alphabet’s earnings per share (EPS) to $2.12, missing the expectations of Wall Street analysts, even as its Google Cloud revenue grew 103%.
Microsoft reported $45.2 billion in capital expenditures and finance leases, below the $50.7 billion consensus from Wall Street analysts, and blamed delayed third-party capacity. That delay moves some deliveries into the second half of Microsoft’s fiscal year, the company said. Chief Financial Officer Amy Hood noted that customer demand “continues to exceed available supply.”
Together, those reports set the background for Amazon, where AWS growth, AWS margins and the company’s own capital spending could draw the most attention. Wall Street analysts expect earnings of $1.97 per share on revenue of $202.25 billion, versus the $1.95 per share and $180.16 billion Amazon reported a year earlier. For AWS, Wall Street analysts see revenue of $45.68 billion, up 38%, with online store sales of $69.6 billion, up 3%, and advertising revenue of $20.91 billion, up 18%. Amazon’s AWS revenue grew 37% in Q2 2026, its fastest pace in 18 quarters.
In a research note, KeyBanc Capital Markets analyst Justin Patterson wrote, “We continue to believe AWS is well positioned to capitalize on AI demand, from workforces modernizing tasks and emerging consumer applications (e.g., AI assistants).” UBS analyst Stephen Ju puts AWS operating margins at 46% for 2027, above the 39% analyst consensus. Oppenheimer analyst Jason Helfstein also expects chip efficiency and revenue growth to lift Amazon’s margins.
Meta Breaks From the Pack as Rivals Slide
Meta stands out as the only one of these AI giants moving higher. Even with that gain, the stock is down 4% year to date (YTD). When it reported on October 21, Meta raised the low end of its 2026 capital spending guidance, now $135 billion to $145 billion, setting the company apart from Alphabet and Microsoft. Advertising strength drove that quarter, with Meta’s revenue up 26.1% to $64.60 billion in Q3 2026.
Amazon stock is up 8% YTD. Microsoft stock is up 9% YTD, while Alphabet stock is now down 8%. Oracle (NYSE:ORCL) stock is at $140.13, down 3%. Down 27% YTD, Oracle has fell behind its AI peers this year.
Investors are sorting these giants one by one, judging each on how its AI spending and cloud growth are holding up. At Amazon, AWS serves as the profit engine behind a dominant e-commerce platform. Azure grounds Microsoft’s pitch alongside its enterprise software. Because Meta doesn’t sell cloud capacity, its advertising-driven spending reads as a signal on AI demand broadly, and the capex flowing out of all three is landing with the same handful of suppliers we profiled in a free report on the AI infrastructure buildout, across power, heat management and networking.
What Amazon’s AWS Report Has to Prove
For Amazon, the question is whether AWS growth tops the consensus bar after Microsoft’s Azure revenue grew 48% in its latest quarter. AWS margins carry just as much weight, given how far the UBS forecast sits above the consensus. A third question for Amazon is whether the company cuts, holds or raises its capital spending plans after lifting them in July.
Bulls can point to five straight quarters of accelerating AWS growth and an AWS backlog growing at triple-digit rates. The bears worry that Amazon’s heavy AI building could squeeze cash flow. A cautious stance may be reasonable until the AWS margin question resolves.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
