Amazon (AMZN  ) shares were 1.8% lower after hours following its Q3 earnings report. The company topped analysts' estimates for sales and earnings. The company also issued guidance that was slightly above expectations.

The underwhelming reaction in the stock price is in part due to the risk-off market environment and heightened expectations for the company given the string of reports in which it beat estimates and raised guidance. Currently, Amazon is about 10% off its all-time high from early-September.

Inside the Numbers

Amazon reported $12.37 in earnings per share which handily beat estimates of $7.41 per share. Revenue also came in higher at $96.2 billion vs $92.3 expected which was a 37% increase from 2019's Q3.

Amazon gave guidance of between $112 billion and $121 billion for the fourth quarter which was above than expectations of $112.3 billion. It also expects operating income to be between $1 billion and $4.5 billion with a $4 billion in increased costs related to spending due to the coronavirus.

Amazon's growth has been impressive, and its trajectory has actually steepened during the pandemic. The company's headcount grew by 50%. It now has 1.12 million full-time employees. Another source of growth is Amazon Web Services (AWS) which generated $11.6 billion in revenue for 29% growth from last year. Its advertising business also saw 54% growth and reached $5.1 billion in revenue for the quarter.

Stock Price Impact

Amazon's stock has been one of the big winners during the pandemic. Its e-commerce business' growth rate accelerated as many people opted for the convenience and safety of online shopping. This could see another surge in activity during the holiday season as many shoppers elect to do their holiday shopping from home. As a result, CEO Jeff Bezos said the company is expecting a record holiday season.

However, the increase in remote work and growth in the digital economy also led to an increase in demand for cloud computing services like AWS. Within cloud computing, AWS is the most dominant company with 31% market share.

All of these positive factors are represented in Amazon's stock price which has outperformed on nearly every timeframe. YTD, the stock is up 72.6%. Since mid-July, it's mostly been range-bound, trading between $3,000 and $3,500.

It's very likely that e-commerce and cloud computing markets keep growing. So, Amazon's business is likely to keep doing well. However, Amazon does face some regulatory risks that it must navigate. This could increase under a Biden administration and Senate Democrats.