"With consumer sentiment and employment rates near 18-year highs and ongoing store closures in the USA, we believe Amazon's strong retail sales growth will continue through the balance of the year and beyond", the analyst added.
"This guidance anticipates an unfavorable impact of approximately 80 basis points from foreign exchange rates", the press release said. In recent after-hours trading, the company's shares were off $157.16, or 8.8%, to $1,625.01. Earnings from the segment surged to $2 billion from just $112 million in the third quarter previous year.
Revenue gained 29 per cent to $56.6 billion in the third quarter. That could signal weaker-than-expected consumer spending as the important holiday season approaches, indicated by Amazon's forecast that its fourth-quarter sales will fall short of analysts' expectations.
Looking ahead, Olsavsky said the company is "expecting a strong holiday season".
Revenue from Amazon's worldwide business, which brings in 27.5% of total sales, rose 13.4 percent in the third quarter, missing estimates, and decelerating from a 27% year-on-year expansion in the previous quarter. The upcoming season is expected to benefit from a strong United States economy and low unemployment, with the National Retail Federation predicting consumer spending during the holidays rising 4 percent.
Those retail rivals made that change a few months after Amazon chose to raise Prime's annual fee to $119, which could hamper Amazon's sales.
Neil Saunders, managing director of GlobalData Retail, said the results reflected a shifting landscape with retailers holding their own against Amazon.More news: A closer look at the Los Angeles Dodgers, Boston’s World Series opponent
Amazon also is investing in physical stores and the pharmacy business.
About 350,000 US Amazon employees and seasonal workers will see their wages increased, but that boost isn't expected to seriously crimp Amazon's bottom line.
That would be Amazon's lowest quarterly sales growth since at least the start of 2016. Analysts projected US$3.9 billion.
For years, Amazon has made expensive bets on new technology and programs, like its $13.7 billion acquisition of Whole Foods in 2017 to storm the US grocery industry.
There were no ratings downgrades from the Wall Street analysts who have nearly universally backed the companies' long-term prospects, but several said there were signs that both were beginning to face tougher competition from tech peers as well as the retail companies Amazon has bullied in recent years.
The world's No.1 cloud business by revenue saw sales up 45.7 percent to $6.68 billion, narrowly edging past estimates of $6.67 billion. The company's burgeoning advertising business continued to show strength, with sales more than doubling in the quarter.