Key takeaways
- Amazon reported Q3 net sales of $201.9B, up 12%, with AWS up 39% to $46.0B.
- Diluted EPS was $1.89, down from $1.95, because last year's quarter included $9.5B of Anthropic investment gains.
- Amazon expects about $220B of cash capex in 2026 and guides Q4 sales of $240B to $247B.
Amazon reported third-quarter results on October 29, and the number that matters for AI is the AWS growth rate: 39%, the fastest in nearly five years. The cost of that growth also showed up, as Amazon's free cash flow over the last twelve months turned negative by $42.4 billion. Amazon earnings for Q3 2026 came with a $220 billion capital spending plan for the year, and shares fell in after-hours trading.
Our earlier piece covered the earnings date. Here are the results.
The headline numbers
Amazon's release gives these figures for the quarter ended September 30:
| Q3 2026 | Change | |
|---|---|---|
| Net sales | $201.9B | up 12% |
| Operating income | $28.1B | up from $17.4B |
| Net income | $20.7B | down from $21.2B |
| Diluted EPS | $1.89 | down from $1.95 |
| AWS sales | $46.0B | up 39% |
| AWS operating income | $17.8B | up from $11.4B |
Operating margin was 13.9%, which Amazon calls a record. Net income fell even though operating income rose, because the year-ago quarter included $9.5 billion of pre-tax gains on Amazon's investment in Anthropic. Amazon also said Prime Day moved into the second quarter this year, which would have added about 4 points to third-quarter sales growth.
AWS is growing faster at a bigger size
AWS is now on a $184 billion annual run rate. At that size, 39% growth is the main reason investors pay attention to this report. Amazon says its Bedrock service, which lets companies call models from several labs through one API, saw spending by Fortune 500 customers rise nearly sevenfold from a year ago, and token volume rise nearly 17 times. It added models from OpenAI, Anthropic, Moonshot AI, SpaceXAI and Z.ai, and put Bedrock Managed Agents into public preview.
Amazon did not report revenue or usage for Trainium, its own AI chip.
What the stock did and why
According to CNBC, as summarized by Techmeme, AWS revenue of $45.98 billion beat the $45.29 billion analysts expected. The same summary says advertising revenue of $19.64 billion came in below the $20.82 billion expected. Shares fell more than 7% in after-hours trading on October 29, per press reports, with sales guidance and spending the main worries.
The spending is large. Amazon says it will put about $220 billion of cash into capital expenditures in 2026, mostly for AI data centers. Property and equipment purchases rose $94.8 billion over the last twelve months, and that is why free cash flow went from a $14.8 billion inflow to a $42.4 billion outflow.
What Amazon expects next
For the fourth quarter, Amazon guides net sales of $240.0 billion to $247.0 billion, up 12% to 16%, and operating income of $28.5 billion to $33.5 billion, against $25.0 billion a year earlier. It expects advertising to grow in the high teens.
The next test is whether AWS growth holds near 39% while spending stays this high. Amazon's fourth-quarter report will show it.