Tech Stocks Slide Ahead of Apple, Amazon Earnings | Closing Bell

Key Concepts

• Earnings Reports: Financial statements released by public companies detailing their performance over a specific period.
• Artificial Intelligence (AI): Technology that enables machines to perform tasks that typically require human intelligence.
• Amazon Web Services (AWS): Amazon's cloud computing platform.
• Consumer Spending: The amount of money households spend on goods and services.
• Market Share: The percentage of a market that a company controls.
• Monetization: The process of converting something into money.
• Operating Margin: A measure of profitability that shows how much profit a company makes from its core business operations.
• Net Sales: Total revenue minus returns, allowances, and discounts.
• Earnings Per Share (EPS): A company's profit divided by the number of outstanding shares.
• Guidance: A company's forecast of its future financial performance.
• Aftermarket Trading: Trading that occurs after the regular stock market hours.
• Daily Active Users (DAU): The number of unique users who engage with a product or service on a given day.
• Cloud Revenue: Revenue generated from cloud computing services.
• Layoffs: Reductions in a company's workforce.
• Severance Costs: Payments made to employees who are laid off.
• Legal Settlement: An agreement reached between parties in a legal dispute to resolve the matter outside of court.

Market Overview at Closing Bell

As the trading day concluded, major U.S. indices showed a predominantly negative trend.

• The Dow Jones Industrial Average closed down 0.2%.
• The S&P 500 experienced a decline of 1%.
• The NASDAQ Composite saw a more significant drop of 1.5%.
• The Russell 2000 (small-cap index) was down 0.8%.

The only sector showing positive movement was the Dow Transports, which gained 0.9%.

Within the S&P 500, out of 235 companies, 266 were trading lower, with three remaining unchanged. The sectors performing poorly included technology. The few sectors in the green were Real Estate (up 0.7%), Financials, and Health Care.

Earnings Reports and Market Reactions

The day was marked by a significant volume of earnings reports, with a focus on major technology companies.

Amazon (AMZN)

Amazon's earnings report, released after the close, showed mixed results but a positive market reaction.

• Third Quarter Net Sales: $80.2 billion, a beat against the Street's expectation of $77.8 billion.
• Amazon Web Services (AWS) Net Sales: $33 billion, a slight miss compared to the Street's expectation of $32.4 billion.
• Earnings Per Share (EPS): $1.95, a beat against the Street's expectation of $1.58.
• Operating Margin: 9.7%, a miss against the Street's expectation of 11.1%.

Despite the miss in AWS net sales and operating margin, the overall sales and EPS beats led to a strong positive reaction in the aftermarket, with shares rising approximately 8% initially, and later up 10% in aftermarket trading.

Key Commentary from Amazon:

• CEO Andy Jassy highlighted "strong momentum and growth across Amazon's AI drives meaningful improvements in every corner of our business."
• Jassy stated that AWS is "growing at a pace we haven't seen since 2022, reaccelerating to 20.2% year over year."
• Regarding the retail side, Jassy mentioned expanding same-day delivery of perishable groceries to over 2,300 communities and plans to double rural communities with same-day and next-day delivery access by year-end.
• Amazon reported an estimated $0.8 billion in severance costs and $2.5 billion in costs related to a legal settlement with the Federal Trade Commission in the most recent quarter.
• Amazon's investment in Anthropic, a rival to OpenAI, contributed a pre-tax gain of $9.5 billion in non-operating income for Q3 2025.

Fourth Quarter Guidance:

• Net Sales: $206 billion to $213 billion, around what the Street had priced in.
• Operating Income: $21 billion to $26 billion, with the Street looking for approximately $23.8 billion.

Roku (ROKU)

Roku's shares experienced a significant decline in aftermarket trading, falling 10% and later down 14%.

• Full Year Net Revenue Forecast: Boosted to $4.69 billion, meeting estimates of $4.66 billion.

Atlassian (TEAM)

Atlassian was a notable gainer in the aftermarket, with shares up 12%.

• Fiscal First Quarter: Reported a significant beat on the bottom line with EPS of $1.04, exceeding the Street's expectation of $0.84.
• Cloud Revenue: Came in above estimates at approximately $998 million.
• Fiscal Second Quarter Guidance: Revenue expected to be $0.54 billion, above street estimates.
• Cloud Revenue Growth (Current Quarter): Projected to rise 23% year-over-year.

Coinbase (COIN)

Coinbase shares were trading higher by about 1% in after-hours trading.

• Third Quarter Total Revenue: $1.87 billion, slightly above estimates of $1.8 billion.
• Third Quarter Trading Volume: $295 billion, just shy of estimates.
• Third Quarter Subscription and Services Revenue: $747 million, above estimates.
• Third Quarter Transaction Revenue: $1.5 billion, above estimates.

Despite revenue beats, the trading volume miss was noted, especially given the volatility in Bitcoin and crypto.

Reddit (RDDT)

Reddit saw a positive reaction in aftermarket trading, with shares up 11%.

• Third Quarter Daily Active Users (DAU): 116 million, beating estimates of just over 114 million.
• Third Quarter Net Income: $162.7 million, a significant beat against the estimate of $4 million.

Zillow (Z)

Zillow's shares dropped in the aftermarket.

• Third Quarter Revenue: $676 million, a beat against the Street's estimate of $670.9 million.
• Third Quarter Adjusted EPS: $0.44, two cents better than the estimate of $0.42.
• Fourth Quarter Outlook: Revenue projected at $645 million to $655 million, above the Street's estimate of $644.3 million.
• Mortgages Revenue: $53 million, above the estimate of $50.2 million.

Twilio (TWLO)

Twilio's shares popped, remaining almost 6% higher in the aftermarket.

• Fiscal Year Adjusted Operating Income Outlook: $900 million to $910 million, above the Street's estimate of $867.9 million.
• Fiscal Year Organic Revenue Growth Outlook: Expected to be between 11.3% and 11.5%, an increase from the previous expectation of 9% to 10% growth.

Floor & Decor (FND)

Floor & Decor announced a leadership change, with shares up 7%.

• President to CEO Transition: Bradley Paulson will take over as CEO from Thomas Taylor, who will move to the Chairman role.

Other Notable Mentions

• Gilead Sciences (GILD): Reported results with some softness on key measures.
• Apple (AAPL): Was up 0.6% going into its earnings print.
• Microsoft (MSFT), Meta (META), Alphabet (GOOGL): Mentioned in the context of earnings, with Alphabet up about 3% into the close, suggesting better monetization.

Synthesis and Conclusion

The trading day concluded with a broad market decline, but the focus quickly shifted to a wave of significant earnings reports. Amazon's results, while mixed, were largely interpreted positively by the market, driven by strong overall sales, EPS beats, and optimistic commentary on AI and AWS growth, leading to a substantial aftermarket rally. Conversely, Roku experienced a sharp sell-off despite meeting revenue forecasts. Atlassian and Reddit stood out as strong performers in the aftermarket due to significant earnings beats and positive outlooks. Zillow, despite beating on revenue and EPS, saw its shares decline. The earnings season continues to be a key driver of market sentiment, with investors scrutinizing AI investments, cloud growth, and consumer spending trends.