Amazon 3Q26 earnings call: TSMC capacity behind AWS's choice to start selling its own AI chips

Intel (INTC) reported Q3 sales of $16.5B, up 21% YoY, and beat earnings estimates. Weak PC demand due to memory semiconductor shortages impacted results. AMZN's earnings also dragged down chipmakers like NVDA, MU, AVGO, and AMD. U.S. consumer spending rose in September with inflation at 3.6%. Geopolitical tensions in the Strait of Hormuz pushed oil prices higher. IOVA and SLS also saw significant share price declines.

Amazon reported a trailing-12-month free cash flow of -$42.4B, a swing of $57.2B from the prior year, due to heavy AI-related capital expenditures. Intel warned of near-term headwinds in the PC industry, citing a memory-chip shortage and weaker demand, projecting the slowdown to last through mid-2027. Both stocks fell sharply in after-hours trading.

Big Tech companies like Alphabet, Amazon, Microsoft, and Meta are investing heavily in AI (US$750B by 2026) while their core businesses slow. Alphabet's ad sales grew at the slowest pace in 5 quarters, and Amazon's e-commerce and ad growth slowed. Despite this, they maintained high capital spending outlooks. Shares fell, with Alphabet losing US$500B in market value. Cloud computing was a bright spot for both Amazon and Google, but AI integration is hurting Google Search's profitability.

Amazon, Microsoft, and Alphabet reported strong cloud growth but diverging cash flows. Amazon's AWS revenue rose 39% YoY, but free cash flow fell to a $42.4B deficit. Microsoft generated $18.6B in quarterly free cash flow, while Alphabet recorded a $9.1B deficit. Samsung reported a record operating profit of KRW 107.4T, driven by semiconductor demand. The results highlight the gap between immediate earnings for semiconductor suppliers and the longer recovery cycle for cloud providers.

Tech firms fell after Amazon, Intel, and Alphabet missed earnings expectations, raising concerns about AI investments. Bitcoin dropped following a major hack at the world's largest crypto exchange. Key companies like Alphabet, Amazon, and Intel saw significant stock declines. Asian tech firms also dropped, with SK hynix and Samsung among the hardest hit. Analysts warn of higher funding costs and credit risk affecting AI sector growth.

Amazon reported $77.3B in Q3 2026 capex, with trailing-12-month free cash flow at negative $42.4B. Intel disclosed a 5% decline in PC segment revenue to $8.1B, citing industry headwinds. Both companies' shares fell in after-hours trading, with Intel down 18%.