Amazon (AMZN  ) shares were trading about 8% lower following the company's Q3 earnings report that missed estimates on the top and bottom lines. However, the biggest surprise was weaker than expected Q4 guidance due to a combination of less e-commerce spending and economic pressures.

Overall, Amazon shares are down 39% YTD which is twice the loss of the S&P 500 (SPY  ). The company's growth has sharply decelerated due to a variety of factors, and it's dealing with overinvestment in infrastructure and capacity. According to reports, new CEO Andy Jassy is looking to cut capex by between 30% and 50% to reduce costs and improve profitability.

Inside the Numbers

In Q3, Amazon reported earnings per share of $0.28 which fell short of expectations of $0.31 per share. Revenue also missed at $127.10 billion vs $127.46 billion, and this was a 15% increase from last year.

Amazon web services (AWS) generated $20.5 billion vs expectations of $21.1 billion. AWS accounted for all of the companies' profit and made up for losses in other segments as it had $5.4 billion of operating income, while the total company had $2.5 billion in profit. However, AWS revenue is the slowest it's been since inception.

Notably, this included a $1.1 billion profit from its Rivian (RIVN  ) stake which had been previously written down by more than $10 billion.

Advertising continues to grow at a steady rate and topped expectations at $9.6 billion vs. $9.5 billion. This was up 25% and didn't see attrition as its secular growth is powerful enough to overwhelm cyclical factors.

However, investors and analysts were disappointed by the company projecting Q4 revenue between $140 billion and $148 billion which is only growth of 2% to 8% and below the consensus forecast of $155.2 billion.

Amazon is facing similar headwinds to other mega-cap tech companies but is also more exposed to the return of normal habits like in-person shopping which has hit e-commerce revenue.

Some of the companies' cost-cutting measures include reducing warehouse space, ending venture projects, closing its nascent, telehealth service, and freezing hiring.

The main silver linings in the report were the growth in the advertising business, the decline in shipping costs which should mean the e-com segment should return to profitability, and the company's increasingly attractive valuation while its long-term franchise continues to get stronger.