Amazon.com Inc. on Thursday forecast a slowdown in sales growth for the holiday season, disappointing Wall Street and warning that inflation-wary consumers and businesses had less money to spend.

Shares fell as much as 17 percent in after-hours trade.

For months, the world's biggest online retailer has fought against troubling macroeconomic tides. It hosted not one, but two cornerstone sales events in a year: Prime Day in July, and the Prime Early Access Sale this month.

For the summer event, it indeed sold more items than ever before to its loyalty shoppers, and meanwhile the company sought revenue from higher Prime subscription fees and a surcharge on some merchants.

Net sales were $127.1 billion in the third quarter ended Sept. 30, still little lower than the $127.5 billion analysts expected, according to IBES data from Refinitiv.

But the economic outlook has not brightened. In a call with reporters, Brian Olsavsky, Amazon's Chief Financial Officer, said the company was bracing for slower economic growth.

"We are seeing signs all around that, again, people's budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues," he said. "We are preparing for what could be a slower growth period, like most companies."

While Amazon would continue to fund earlier-stage businesses like its lucrative cloud-computing and advertising divisions, it would question costs elsewhere and proceed carefully on hiring, he said.

"It’s possible that retail sales will decline year-over-year. I don’t actually believe that will happen, but the market definitely doesn’t like it," said Wedbush Securities analyst Michael Pachter.

Amazon forecast net sales of between $140 billion and $148 billion, or growth as little as 2 percent from a year earlier. Analysts were expecting $155.2 billion.

Prior holiday quarter sales growth was 9 percent in 2021 and 38 percent in 2020.

CLOUD MISSES

Across the retail sector, U.S. online sales are expected to rise at their slowest pace in years this holiday season. Results in the tech industry were just as poor this week for cloud-computing rivals Microsoft Corp. and Alphabet Inc.'s Google, adding to recession fears. U.S. consumer confidence did a U-turn in October.

Amazon Web Services (AWS), the company's lucrative data-storage and computing division serving enterprises, only helped so much. While it provided much-needed operating income, just like rival Microsoft, it fell short of estimates.

It increased third-quarter cloud sales 27.5 percent to $20.5 billion, while analysts had expected more than $21.1 billion.

Facing high inflation and receding consumer demand, new Chief Executive Officer Andy Jassy has raced to control costs across Amazon's vast array of businesses.

Amazon has slowed warehouse openings and refrained from filling some open positions. It announced it would shut down its virtual healthcare service by year end, and it is scaling back a long-touted effort to deliver goods via small autonomous sidewalk cars.

Still, worldwide shipping costs grew 10 percent in the third quarter to $19.9 billion. Amazon's net income also decreased to $2.9 billion in the third quarter, while beating analysts' average estimate of a $2.2 billion profit, according to IBES data from Refinitiv.

In a statement, Jassy said, "There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets."

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