Amazon Reports Decrease In Net Income Due To Unrealized AI Investments
Amazon's net income decreased to $20.7 billion from $21.2 billion last Q3, despite growth in AWS and ads, according to AdExchanger. The decline is largely due to unrealized AI investments, which had a significant impact on the company's earnings.
Original reporting · adexchanger.com
Original: “Unrealized AI Investments Drag Amazon’s Income, But AWS And Ads Are Still Growing”
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How this was written. Adtomix wrote this article with a language model from AdExchanger’s reporting (model: @cf/meta/llama-3.3-70b-instruct-fp8-fast); it describes that reporting rather than adding to it. The original, linked above, is the full story.
Key points from AdExchanger’s report
- Amazon's net income decreased to $20.7 billion from $21.2 billion last Q3 due to unrealized AI investments.
- AWS grew 39.3% year-over-year, its fastest growth rate in nearly five years, driven by demand for AI and cloud computing services.
- Amazon's ads business showed growth, with revenue up 12% year-over-year, totaling $19.6 billion, but lagged behind the rest of the year.
- Amazon is investing in new agentic AI features, including Amazon Ads Agent, to drive future growth.
- The adoption of agentic AI on the consumer side has been slow, but may take root in the future.
Amazon's Q3 earnings report showed a decrease in net income, which may be attributed to the lack of pre-tax gains from its investments in AI startup Anthropic, AdExchanger reported. The company's net income decreased to $20.7 billion from $21.2 billion last Q3. This decline may be a cause for concern for investors, who expect a company's payout from AI investments to keep growing over time.
The comparison to last year's AI gains is not favorable, as Amazon's Q3 2025 numbers were boosted by $9.5 billion in pre-tax gains from its investments in Anthropic. Without a similar windfall this year, the difference is stark. As a result, Amazon stock dropped 7% in after-hours trading on Thursday, according to AdExchanger.
Despite the decline in net income, Amazon's AWS and ads businesses continue to grow. AWS, which provides AI and cloud computing infrastructure, grew 39.3% year-over-year, its fastest growth rate in nearly five years. This growth may be driven by the increasing demand for AI and cloud computing services, AdExchanger noted.
Amazon's ads business also showed growth, with revenue up 12% year-over-year, totaling $19.6 billion. However, this growth lagged behind the rest of the year, with Amazon Ads reporting 22% growth in Q1 and 26% in Q2. The slower growth in Q3 may be attributed to Amazon rescheduling Prime Day from Q3 to Q2, as well as the lack of NBA games on Amazon Prime Video, AdExchanger reported.
To spur future growth, Amazon is investing in new agentic AI features, including Amazon Ads Agent, which was launched in September. This platform allows advertisers to launch full-funnel campaigns and continually optimizes them once they're live. However, the adoption of agentic AI on the consumer side has been slow, with Amazon CEO Jassy stating that agentic shopping is 'still not great' and isn't meaningfully more convenient than humans completing one-click orders themselves.
Despite the slow adoption of agentic AI on the consumer side, Jassy believes that it may take root in the future. He stated that 'few customers are doing much shopping this way yet,' implying that there is potential for growth in this area. As Amazon continues to invest in AI and agentic AI features, it may be able to drive further growth in its ads and AWS businesses, AdExchanger noted.
Looking ahead, Amazon's growth prospects may be driven by its continued investment in AI and cloud computing infrastructure. Jassy stated that AWS could grow into 'a trillion-dollar revenue business in the next five to 10 years,' driven by the surge in businesses running their core workloads on it. This growth may be driven by the increasing demand for AI and cloud computing services, as well as Amazon's continued innovation in these areas.
Questions and answers
What was the main reason for Amazon's decrease in net income?
The main reason for Amazon's decrease in net income was the lack of pre-tax gains from its investments in AI startup Anthropic, which had a significant impact on the company's earnings last year.
How did Amazon's AWS business perform in Q3?
Amazon's AWS business grew 39.3% year-over-year, its fastest growth rate in nearly five years, driven by demand for AI and cloud computing services.
What is Amazon's outlook for the future of agentic AI?
Amazon CEO Jassy believes that agentic AI may take root in the future, despite its slow adoption on the consumer side, and is investing in new agentic AI features to drive future growth.
