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Amazon Shares are Lower Ahead of Q4 Earnings

Amazon (NAS100: AMZN) shares are looking at a trendline support test ahead of the latest earnings release.

Amazon Shares are Lower Ahead of Q4 Earnings

AMZN – Daily Chart

The price of AMZN has found resistance at $248 and is now looking at $235, which has held since November.

Amazon reported mixed results in the previous quarter, with revenue that beat analysts’ expectations. However, operating income of $17.4 billion was flat year over year. Sales were hampered by $4.3 billion in special charges, including a $2.5 billion Federal trade settlement. The company also faced $1.8 billion in costs related to 14,000 corporate redundancies in October.

Big tech’s reliance on cloud services continues, and Amazon Web Services is a big performer for Amazon, with revenue up 20% year-on-year to $33.0 billion. That marked the company’s fastest AWS expansion since 2022. The cloud division reported $11.4 billion in operating income and a strong $200 billion in order backlog, driven by corporate demand for artificial intelligence.

Advertising revenue grew by 24% to $17.7 billion, surpassing retail growth and boosting the company’s profit margins.

One issue for Amazon was free cash flow, which plummeted 69% to just $14.8 billion on a trailing twelve-month basis. That was due to a $50 billion year-on-year surge in capital expenditure. That was another highlight of the strain that AI spending is placing on tech firms.

Amazon raised $15 billion through a bond offering in November 2025, which was its first U.S dollar issuance in three years. Tech firms are increasingly turning to debt markets to finance their AI ambitions, but it was private credit market pressures that have led to a sell-off in tech this week.

The fourth quarter is Amazon’s most important retail period, due to Prime deals in October, Black Friday revenue and Cyber Monday in November. Those events also lead into the Christmas shopping season. The company posted a record-breaking Prime Day in July, but investors will be looking for momentum into the year-end. The coming earnings release will have to beat the company’s Q4 revenue guidance of $206-213 billion.

Amazon is facing heightened competition from rivals such as Walmart, Temu, and Shein, which are putting pressure on its profit margins.

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.

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