Amazon reported third-quarter 2026 results on October 29. AWS net sales rose 39% to $46.0 billion, its fastest growth in nearly five years, and AWS operating income reached $17.8 billion. But diluted EPS of $1.89 came in below the roughly $1.97 analysts expected, free cash flow over the trailing twelve months was an outflow of $42.4 billion, and the shares fell in after-hours trading.
The quarter in numbers
From Amazon's results exhibit filed with the SEC (quarter ended September 30, 2026):
| Line | Q3 2026 | Q3 2025 |
|---|---|---|
| Net sales | $201.9B | $180.2B |
| North America sales | $112.9B | n/a |
| International sales | $43.1B | n/a |
| AWS sales | $46.0B (+39%) | n/a |
| Operating income | $28.1B | $17.4B |
| AWS operating income | $17.8B | $11.4B |
| Net income | $20.7B | $21.2B |
| Diluted EPS | $1.89 | $1.95 |
Net income fell year over year mainly because Q3 2025 included $9.5 billion of pre-tax gains from Amazon's Anthropic investments, according to Amazon. Amazon also said Prime Day moved into Q2 this year, and that excluding the shift, third-quarter growth would have been about 400 basis points higher.
Our arithmetic: AWS was roughly 23% of net sales ($46.0 billion of $201.9 billion) but about 63% of operating income ($17.8 billion of $28.1 billion), with an operating margin of about 39%.
Cash flow: where the story turns
Trailing twelve-month operating cash flow was $168.3 billion, up 29%. Purchases of property and equipment were $215.2 billion gross, or $210.7 billion net of proceeds from sales and incentives. Free cash flow was an outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier.
Amazon's trailing free cash flow swung from +$14.8B to -$42.4B in a year
Free cash flow over the trailing twelve months ended September 30, in billions of US dollars, as reported by Amazon.
Source: Amazon Q3 2026 results, Form 8-K exhibit 99.1 (SEC).
Operating cash flow grew 29%, yet capital spending grew faster, turning a $14.8 billion inflow into a $42.4 billion outflow.
The pattern mirrors Alphabet's Q3 report and Meta's: revenue and operating cash flow are growing quickly, and spending is growing faster.
The guide: 2026 and 2027
Amazon guided Q4 net sales to $240.0 to $247.0 billion (12% to 16% growth) and operating income to $28.5 to $33.5 billion. It reiterated roughly $220 billion of 2026 cash capex, and coverage of the earnings call reports that CEO Andy Jassy said Amazon will spend "meaningfully more" in 2027, and projected AWS growth rates above 40% in both 2027 and 2028. Those projections are management's, and depend on capacity being delivered and demand holding.
Jassy also said: "There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years."
Backlog and silicon
Coverage of the report puts AWS backlog at $578 billion, more than double a year earlier. Amazon's release describes Trainium as its custom AI accelerator and says TorchNeuron lets developers run existing PyTorch code on it without rewriting; no Trainium-specific financial figures were given. The release also notes Anthropic's current Claude models on Amazon Bedrock. For the silicon background see our look at Google's TorchTPU and Amazon's TorchNeuron.
AWS
Anthropic
NVIDIAReading across the hyperscalers
- Microsoft reported Azure growth of 48% for its September quarter, per market coverage, and said it expects to stay free-cash-flow positive.
- Alphabet reported Cloud growth of 103% and negative free cash flow.
- Amazon reported AWS growth of 39%, the largest absolute cloud segment, with the largest trailing cash outflow of the three.
Growth rates are not comparable across companies, because they start from different bases and include different items (Alphabet's includes TPU system sales). See our AWS Q2 write-up for the prior quarter's baseline.
What to watch next
- Q4 operating income against $28.5 to $33.5 billion.
- The 2027 capex figure. "Meaningfully more" than $220 billion is not yet a number.
- Whether AWS growth passes 40%.
- Free cash flow. Whether the outflow widens or stabilises.
For teams, a practical implication is portability: with every major cloud raising capex, pricing and capacity will keep shifting. Using a model-agnostic tool such as Metir keeps the choice of model, and cloud, a setting rather than a rebuild.
Sources:
- Amazon Q3 2026 results, Form 8-K exhibit 99.1 (SEC)
- Amazon.com Q3 Earnings Call Highlights (MarketBeat)
- AWS growth hits 39%, its fastest in nearly five years, as Amazon misses on earnings (GeekWire)
- Amazon earnings live: Q3 earnings miss sends stock lower (Yahoo Finance)
- Microsoft Q1 FY2027: Azure up 48% (Phemex)
Image credits
Header image: Andy Jassy, President and CEO of Amazon, by Lisi Mezistrano Wolf, via Wikimedia Commons, CC BY-SA 4.0. In-body photograph: AWS data center buildings in Ashburn, Virginia, by Vahurzpu (2020), via Wikimedia Commons, CC BY-SA 4.0. Both are file photos.