Key takeaways
- Amazon’s Q3 2026 revenue increased 12% YoY to $201.9 billion, fuelled by growth across its business segments.
- Operating income jumped 61% to $28.1 billion, pushing the operating margin to a record 13.9%.
- Amazon Web Services (AWS) revenue rose 39% to $46 billion, its fastest growth in almost five years.
- Net income slipped to $20.7 billion from $21.2 billion a year before, partly because of investment gains that boosted last year’s results.
- Amazon expects Q4 revenue of $240 billion to $247 billion and plans to spend around $220 billion on capital expenditures in 2026.
On Oct. 29, 2026, Amazon reported strong revenue and operating profit growth for the third quarter of 2026, supported by its cloud computing business and improving retail profitability.
The company generated $201.9 billion in net sales for Q3 2026, up 12% from $180.2 billion in the same quarter the previous year. Currency movements reduced reported growth by around one percentage point.
Amazon also noted that Prime Day took place in the 2nd quarter in most major countries this year, compared with the 3rd quarter in 2025.
Operating income rose to $28.1 billion from $17.4 billion a year earlier. This pushed Amazon’s operating margin to 13.9%.
Why did Amazon’s share price fall after Q3 2026 earnings?
Amazon’s share price dropped around 7% after the company missed Wall Street’s expectations for revenue, net income, and advertising sales.
Amazon reported Q3 revenue of $201.9 billion against estimates of $202.2 billion. Net income came in at $20.7 billion, below the expected $21.5 billion, while advertising revenue reached $19.6 billion against forecasts of $20.8 billion.
Investors are also concerned about Amazon’s rising AI spending. The company plans to invest around $220 billion in capital expenditure in 2026, mainly to expand AI infrastructure and data centres. This spending has already pushed trailing 12-month free cash flow to a negative $42.4 billion.
Although AWS revenue grew 39% to $46 billion, investors remain cautious about how quickly these massive investments will generate returns.
Broader technology sector weakness, following disappointing results from Alphabet and concerns about AI spending, added to the selling pressure.
Amazon Q3 2026 financial highlights
| Metric | Q3 2026 | Q3 2025 | Change |
| Net sales | $201.9B | $180.2B | +12% |
| Operating income | $28.1B | $17.4B | +61% |
| Operating margin | 13.9% | 9.7% | +4.2 pts |
| Net income | $20.7B | $21.2B | −2% |
| Diluted EPS | $1.89 | $1.95 | −3% |
| AWS sales | $46.0B | $33.0B | +39% |
| Advertising sales | $19.6B | $17.7B | +11% |
| Free cash flow (trailing 12 months) | −$42.4B | $14.8B | Swung to outflow |
AWS revenue jumps 39% as AI demand accelerates
AWS was Amazon’s strongest growth driver in Q3 2026. Revenue from its cloud computing business rose 39% YoY to $46 billion, up from $33 billion.
This was AWS’s fastest growth in almost five years and represented an annualized revenue run rate of around $184 billion. An annualized run rate estimates a full year’s revenue by multiplying the latest quarter’s revenue by four; it is not a forecast of actual annual revenue.
AWS also generated $17.8 billion in operating income, compared with $11.4 billion a year earlier. Its operating margin was around 38.7%, making the cloud business Amazon’s largest operating profit contributor.
AWS financial performance
| Metric | Q3 2026 | Q3 2025 | Year-over-Year Change |
| Revenue | $46.0 billion | $33.0 billion | +39% |
| Operating income | $17.8 billion | $11.4 billion | +55% |
| Share of Amazon’s total revenue | 23% | 18% | +5 percentage points |
AWS accounted for around 23% of Amazon’s total revenue but generated around 63% of its operating income. This highlights the importance of cloud computing to Amazon’s overall profitability.
Demand for AI infrastructure remains a major growth opportunity. Amazon signed new AWS agreements with companies including Meta, NVIDIA, OpenAI, Salesforce, and Oracle. It also expanded Amazon Bedrock, its service for building applications using AI models.
Amazon reported that Fortune 500 companies spent nearly seven times more on Bedrock year over year, while total token volume increased nearly 17 times.
However, Amazon’s opportunity comes with a high cost. It plans to spend around $220 billion on capital expenditures in 2026, much of which supports infrastructure investments, including AI. Investors will need to assess whether the resulting revenue and profit growth justify this spending.
North America and international businesses show steady growth
Amazon’s retail and international businesses also improved their operating profitability, although their revenue growth was slower than AWS.
North America generated $112.9 billion in revenue, up 6% from a year before. Operating income increased to $8.7 billion from $4.8 billion.
International revenue rose 5% to $43.1 billion. Excluding foreign exchange movements, growth reached 8%. Operating income increased to $1.6 billion from $1.2 billion.
Revenue and operating income by segment
| Business Segment | Q3 2026 Revenue | Revenue Growth | Q3 2026 Operating Income | Q3 2025 Operating Income |
| North America | $112.9 billion | 6% | $8.7 billion | $4.8 billion |
| International | $43.1 billion | 5% | $1.6 billion | $1.2 billion |
| AWS | $46.0 billion | 39% | $17.8 billion | $11.4 billion |
Why Amazon’s net income is down despite higher operating profit
Amazon’s net income fell by approx. 2% to $20.7 billion, even as operating income increased by more than 60%.
The main reason was the difference in non-operating income between the two periods.
In Q3 2025, Amazon recorded $9.5 billion in pretax gains from its funding in Anthropic. In Q3 2026, the company reported a net non-operating expense of approximately $1.2 billion.
This difference affected the comparison between the two quarters. Amazon’s operating income increased by $10.7 billion, but the change in non-operating results more than offset that improvement at the pretax income level.
As a result, diluted earnings per share declined to $1.89 from $1.95.
For investors, this distinction matters. Net income includes items outside a company’s core operations, including investment gains and losses. Operating income provides a clearer view of whether its main businesses are becoming more profitable, although it does not capture every cost or risk.
Amazon’s trailing 12-month free cash flow reconciliation
| Billions ($) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
| Operating cash flow | $130.7 | $139.5 | $148.5 | $161.4 | $168.3 |
| Purchases of property and equipment, net of proceeds from sales and incentives | ($115.9) | ($128.3) | ($147.3) | ($169.0) | ($210.7) |
| Free cash flow | $14.8 | $11.2 | $1.2 | ($7.6) | ($42.4) |
Amazon Q4 2026 guidance: What Amazon expects next
Amazon expects Q4 sales growth of 12% to 16% and an operating profit growth of up to 34%.
| Metric | Q4 2026 Guidance | Comparison / Details |
| Net sales | $240 billion–$247 billion | 12%–16% year-over-year growth |
| Foreign exchange impact | -60 basis points | Expected unfavorable impact on revenue growth |
| Advertising revenue growth | High teens | Year-over-year growth expected |
| Operating income | $28.5 billion–$33.5 billion | Compared with $25 billion in Q4 2025 |
| 2026 capital expenditures | Approx $220 billion | Full-year cash capital expenditure estimate |
Here’s a detail worth noting. Amazon spent about $172 billion in net capex in the first nine months of 2026. If the $220 billion full-year figure holds, Q4 spending would come in near $48 billion. That would mark a steep drop from Q3’s $75.9 billion. Either spending cools sharply, or Amazon raises its forecast later. Investors should watch this closely.
Read more: Anthropic’s Growth Has a Catch: Big Tech Controls the Customer Pipeline!
The bottom line
Amazon’s core machine works better than ever. AWS is accelerating, retail margins are widening, and the company just set an all-time margin record.
But investors now judge Amazon on a harder question: will $220 billion a year in AI spending pay off? Until free cash flow turns around, every soft spot, like this quarter’s ad slowdown, will draw a harsh reaction.
For Q4, watch three things: ad growth returning to the high teens, AWS holding near 40%, and whether capex really slows as the guidance implies. Jassy believes Amazon may build two trillion-dollar revenue businesses within 5–10 years. The next few quarters will show whether the market buys that vision.