Amazon Q3 Earnings: AWS Grows 39%, Fastest Pace in Nearly 5 Years

Hakkı ALKAN

October 29, 2026

Amazon reported third-quarter 2026 revenue of $201.9 billion on October 29, up 12% from a year earlier, as Amazon Web Services (AWS) grew 39% to $46.0 billion, its fastest pace in nearly five years. The Amazon Q3 earnings also showed a record 13.9% operating margin, but shares fell more than 8% in after-hours trading as earnings per share and advertising revenue came in below Wall Street estimates.

Amazon Q3 Earnings at a Glance

According to Amazon’s official results release, the company’s numbers for the quarter ended September 30, 2026 were:

• Net sales: $201.9 billion, up 12% from $180.2 billion (13% excluding currency effects).
• Operating income: $28.1 billion, up from $17.4 billion a year ago.
• Net income: $20.7 billion, or $1.89 per diluted share, down from $21.2 billion ($1.95 per share).
• AWS: $46.0 billion in sales, up 39%, with $17.8 billion in operating income.
• North America: $112.9 billion, up 6%. International: $43.1 billion, up 5%.

Amazon said Prime Day moved into the second quarter in most large countries this year, while it fell entirely in the third quarter in 2025. Without that shift, the company says third-quarter growth would have been about 4 percentage points higher. The drop in net income comes mainly from $9.5 billion in pre-tax gains on its Anthropic investment that boosted the year-ago quarter.

Where Amazon Missed Expectations

Analysts polled by LSEG expected $1.96 in earnings per share on $202.31 billion in revenue, CNBC reports. AWS beat the $45.29 billion StreetAccount estimate, but advertising revenue of $19.64 billion trailed the $20.82 billion forecast. Amazon blamed timing effects tied to Prime Day and said it expects ad revenue growth in the high teens in the fourth quarter.

AI Spending Pushes Free Cash Flow Negative

The figure likely to worry investors most is cash. Trailing twelve-month free cash flow swung to an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier, because property and equipment purchases rose by $94.8 billion, mostly for artificial intelligence infrastructure. Amazon still expects about $220 billion in cash capital expenditures for 2026.

CEO Andy Jassy defended the spending. “Our AWS investment in functionality and infrastructure is working,” he said, adding that Amazon projects AWS revenue growth of over 40% in both 2027 and 2028. AWS now runs at a $184 billion annualized revenue rate.

The reaction mirrors this week’s sell-off in Alphabet, which lost a record amount of market value after its own Q3 2026 report showed heavy AI spending. AI demand is reshaping the cloud market elsewhere too: Anthropic, an Amazon-backed AI lab, was this week reported to be SpaceX’s largest customer, and it is also turning to natural gas to power data centers.

Q4 2026 Guidance

For the holiday quarter, Amazon expects net sales of $240.0 billion to $247.0 billion, growth of 12% to 16%, and operating income of $28.5 billion to $33.5 billion, compared with $25.0 billion in the fourth quarter of 2025.