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