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Amazon gives investors reason for concern ahead of holidays

It's certainly not a giant miss. But given the extent of Amazon.com's rally, there was no margin for error.

The e-commerce giant said on Thursday that revenue in the fourth quarter, or holiday season, will be $42 billion to $45.5 billion, representing growth of 17 percent to 27 percent.

Analysts' expectations, according to Thomson Reuters, were for sales of $44.6 billion, so toward the high end of Amazon's range.

The stock sank 4.9 percent in extended trading to $778.

In Wall Street speak, Amazon shares were priced for perfection. The stock jumped 34 percent in the past year, by far the best performance among the largest tech companies. Amazon's price-to-sales ratio of 3.3 is significantly higher than its five-year average of 2.3, according to FactSet.

Don't expect too much panic though, even if Amazon's forecast heading into the Christmas shopping season was lighter than expected.

Third-quarter revenue of $32.7 billion was in line with estimates. Earnings per share of 52 cents fell well short of the 79-cent average estimate, according to Thomson Reuters.

CEO Jeff Bezos is quick to remind investors that this company is in serious investment mode, and for the most part it's paying off.

Revenue at Amazon Web Services, the company's cloud-computing division, jumped 55 percent to $3.2 billion with a fat operating margin of 27 percent.

Alexa, the artificial intelligence machine behind the Echo and increasingly more Amazon products, "may be Amazon's most loved invention yet," Bezos said in the press release.

Alexa is powering music recommendations on the Echo, and tens of thousands of developers are building skills for Alexa to make the voice-controlled assistant smarter. The company said Alexa is coming to the Fire tablet and Fire TV stick.

And Amazon is investing in tons of original content — movies and TV shows — to give consumers even more incentives to become Prime members.

With all its momentum, Amazon bulls may very well look at any price slide as a chance to add to their position.