AI-assisted research analysis by FutureKnowledge. Sources checked 30 October 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
Amazon’s third-quarter AWS revenue grew 39% to $46.0 billion, its fastest pace in nearly five years, but $77.3 billion of quarterly capital spending pushed trailing free cash flow to a $42.4 billion outflow and sent the shares sharply lower after hours on 29 October.
Amazon Q3 results: the key numbers
For the quarter ended 30 September 2026, Amazon’s earnings release reported:
- Net sales: $201.9 billion, up 12% from $180.2 billion (13% excluding a $0.9 billion currency drag).
- North America: $112.9 billion, up 6%; International: $43.1 billion, up 5% (8% excluding currency).
- AWS: $46.0 billion, up 39%, an annualised run rate of $184 billion.
- Operating income: $28.1 billion, up from $17.4 billion, a 13.9% margin that Amazon called its highest ever. AWS contributed $17.8 billion.
- Net income: $20.7 billion, down from $21.2 billion; diluted EPS $1.89 against $1.95.
The fall in net income is largely an accounting comparison: the year-earlier quarter included $9.5 billion of pre-tax gains on Amazon’s investment in Anthropic, the AI company that has since filed publicly for a Nasdaq listing. Amazon also said Prime Day moved into the second quarter in most large countries this year; without that shift, it estimated sales growth would have been about 4 percentage points higher.
How the results compared with expectations
Analysts had expected EPS of $1.96 and revenue of about $202.3 billion, SiliconANGLE reported; Investing.com put the revenue consensus at $202.1 billion. Either way, revenue was a narrow miss and EPS a clearer one. Operating income of $28.1 billion beat the $26.2 billion expected and Amazon’s own $22.5–26.5 billion guidance range.
AWS was roughly in line, at $45.98 billion against $45.9 billion expected. The weaker lines were advertising, at $19.64 billion (up 11%, against $20.82 billion expected) and online stores, at $68.47 billion (up 2%, against $69.68 billion expected), according to SiliconANGLE. Advertising growth slowed sharply from 26% in the prior quarter, StockTitan noted, though the Prime Day timing affects that comparison.
Why Amazon shares fell: capex and cash flow
The main concern was spending. Purchases of property and equipment were $77.3 billion in the quarter, up from $35.1 billion a year earlier and well above the roughly $58.7 billion analysts had pencilled in, per SiliconANGLE. Amazon kept its 2026 cash capex forecast at about $220 billion. Trailing twelve-month operating cash flow rose 29% to $168.3 billion, but free cash flow swung to an outflow of $42.4 billion from a $14.8 billion inflow, which the company attributed mainly to AI investment.
Financing has shifted too. Long-term debt rose to $173.1 billion from $65.6 billion at the end of 2025, and quarterly interest expense climbed to $1.7 billion from $0.5 billion, the release shows.
Reported share moves varied with the time of the quote. StockTitan’s market wrap recorded a 7.3% after-hours fall before 8 p.m. ET, while its separate earnings analysis cited a price about 11.4% below the $243.79 close. Earlier in the day the Nasdaq had already fallen 1.4%, weighed down by Alphabet’s reaction to its own capex plans.
AWS growth against Azure and Google Cloud
AWS remains the largest cloud business, but its rivals are growing faster. StockTitan compared AWS’s $46.0 billion with Microsoft Azure at $33.2 billion (up 48%) and Google Cloud at $30.7 billion (up 103%), cautioning that Google Cloud includes Workspace and chip sales and so is not a like-for-like measure. FutureKnowledge covered Microsoft’s Azure results earlier this week.
Chief executive Andy Jassy said he expects AWS growth of more than 40% in both 2027 and 2028, and that revenue from Amazon’s Graviton and Trainium chips is growing at triple-digit rates. SiliconANGLE reported that Amazon plans to offer Trainium to outside customers toward the end of next year. Forrester analyst Tracy Woo told the publication the investment profile suggests Amazon sees capacity constraints rather than demand constraints.
Q4 guidance
Amazon guided fourth-quarter net sales of $240 billion to $247 billion, up 12% to 16%, and operating income of $28.5 billion to $33.5 billion, against $25.0 billion a year earlier. The roughly $243.5 billion midpoint sits slightly below consensus estimates of $244.3–244.5 billion cited by Investing.com and SiliconANGLE. The company expects advertising growth to recover to the high teens.
What it means for India and businesses
Amazon’s results add to evidence that the largest technology companies are now funding the AI build-out partly with outside capital: Amazon through higher debt, and Meta through a planned equity raise of up to $95 billion. For businesses buying cloud capacity, including Indian enterprises and startups that rely on AWS, Jassy’s comments point to continued tight supply of AI compute and greater use of Amazon’s own chips. Slow online-store growth in North America and International is a reminder that the retail business is growing at single-digit rates even as cloud accelerates. Amazon did not give a country-level update for India in its release.
Who is more or less exposed
- More exposed to AWS spending: data-centre builders, power and cooling suppliers, memory and networking vendors, and chip design partners.
- More exposed to retail softness: third-party sellers and logistics partners tied to online-store volumes.
- Mixed: advertisers and ad-tech firms, given slower ad growth this quarter but a stronger guided fourth quarter.
Scenarios to watch (conditional scenarios, not predictions)
| If… | Then a plausible outcome is… |
|---|---|
| AWS growth crosses 40% as Jassy expects | Investors may judge the capex as matched by revenue, easing cash-flow worries |
| Capex stays near $77 billion a quarter into 2027 | Free cash flow could stay negative and debt keep rising |
| Advertising returns to high-teens growth in Q4 | The Q3 slowdown would look mainly like a Prime Day timing effect |
| Holiday sales land near the low end of guidance | Attention would shift to weakness in the core retail business |
What to watch next
- The regular-session share reaction on 30 October and analyst estimate revisions.
- Any update on Amazon’s 2027 capex plans after the $220 billion 2026 budget.
- Details in the 10-Q on AWS backlog, leases and debt.
- Timing of external Trainium availability.
Bottom line
Amazon’s Q3 showed AWS accelerating to 39% growth and record operating margins, but also a quarterly capex bill more than double last year’s and negative free cash flow. Revenue and EPS fell slightly short of forecasts, and advertising and online stores disappointed, so the market focused on the cost of the AI build-out rather than on cloud growth.
Method note: This analysis compared Amazon’s Q3 2026 earnings release (primary source) with reporting by SiliconANGLE, Investing.com and StockTitan. Consensus figures differed slightly between publishers (revenue $202.1–202.3 billion); both are shown. After-hours share moves varied by time of quote and are given as reported.