Amazon Q3 2026 Earnings: AWS Grows 39%, EPS Misses, and Why the Stock Fell
Amazon Q3 2026 results: $201.9B sales, AWS +39% to $46B, EPS $1.89 misses, -$42.4B free cash flow, Q4 guidance, and why the stock fell.
Amazon's Q3 2026 results, in short: revenue rose 12% to $201.9 billion, and AWS grew 39% to $46.0 billion, its fastest pace in nearly five years. Even so, earnings per share of $1.89 missed estimates. Free cash flow over the trailing 12 months swung to a $42.4 billion outflow, and Andy Jassy said Amazon expects to "spend meaningfully more" on capital investment in 2027. Shares fell more than 6% in after-hours trading on 29 October and early reports put them about 7% lower before Friday's open (30 October).
Amazon reported on Thursday 29 October 2026, after the US market closed. For background before you read on, see our Q3 earnings preview and our piece on why Amazon stock was already under pressure in October.
This article is news and analysis, not investment advice.
Q3 2026 results at a glance
All actual figures come from Amazon's Q3 2026 press release. Consensus estimates are labelled with the firm that compiled them, as reported by CNBC (LSEG, StreetAccount, FactSet) and Yahoo Finance (FactSet).
| Metric | Q3 2026 | Q3 2025 | Change | vs estimate |
|---|---|---|---|---|
| Net sales | $201.9B | $180.2B | +12% (+13% ex-FX) | Miss: $202.31B expected (LSEG) |
| Diluted EPS | $1.89 | $1.95 | -3% | Miss: $1.96 (LSEG); $1.97 (FactSet) |
| Operating income | $28.1B | $17.4B | +61% | n/a |
| Operating margin | 13.9% | 9.7% | +4.2 pts | n/a |
| Net income | $20.7B | $21.2B | -2% | n/a |
| AWS sales | $46.0B | ~$33.0B | +39% | Beat: $45.29B expected (StreetAccount) |
| AWS operating income | $17.8B | $11.4B | +56% | n/a |
| Advertising services | $19.6B | $17.7B | +11% | Miss: $20.82B expected (StreetAccount) |
| Online stores | $68.5B | $67.4B | +2% | Miss: $69.68B expected (StreetAccount) |
| Subscription services | $14.0B | $12.6B | +11% | n/a |
| Third-party seller services | $46.5B | $42.5B | +9% | n/a |
| Capex (purchases of property and equipment) | $77.3B | $35.1B | +120% | Above $58.7B expected (FactSet) |
Two items in the release explain some of the odd-looking numbers:
- Prime Day moved. In most large countries this year, Prime Day fell in Q2 instead of Q3. Amazon says that without the shift, Q3 growth would have been about 400 basis points (4 percentage points) higher.
- Last year's Anthropic gain. Q3 2025 net income included $9.5 billion of pre-tax gains on Amazon's Anthropic investment. Without a similar gain this quarter, net income and EPS dipped even though operating income rose 61%.
AWS deep dive: 39% growth and a $578 billion backlog
AWS was the strongest part of the report. Revenue rose 39% to $46.0 billion, ahead of the StreetAccount consensus of $45.29 billion, and segment operating income reached $17.8 billion, up from $11.4 billion. That works out to an operating margin of about 38.7% on our calculation. In the release, Jassy put the annual revenue run rate at $184 billion.
Growth outlook. In the release, Jassy said "our AWS investment in functionality and infrastructure is working" and pointed to "projected revenue growth rates of over 40% both in 2027 and in 2028." This is Amazon's own projection, not a guarantee. It is also unusual for Amazon to give a multi-year growth number for AWS.
Backlog. On the call, Jassy said AWS's backlog had reached $578 billion, up from $496 billion at the end of the previous quarter, according to coverage of the call. The release itself does not appear to include the figure. Backlog is contracted revenue that has not yet been recognised, so it shows how much demand is already locked in.
Capacity and chips. Jassy said customers are taking up new capacity almost as fast as Amazon can install it. According to CNBC, he said the custom chips business "continues to grow triple-digit percentages year over year," and Trainium is expected to be available outside AWS "late in 2027." Yahoo Finance reported that commitments for Trainium have grown more than 20 times, though no timeframe was given.
Anthropic. We did not find a direct Jassy or Olsavsky quote about Anthropic from this call in the coverage we checked, so we have not attributed one. What is on record is that Anthropic has committed to large, multi-year spending on AWS and Trainium. The Anthropic stake also affects Amazon's earnings, as the Q3 2025 comparison shows. Our Amazon–Anthropic deal explainer covers the details.
Long-term pitch. In the release, Jassy wrote that "there has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years."
Retail, advertising and subscriptions
- North America: sales rose 6% to $112.9 billion, and operating income rose to $8.7 billion from $4.8 billion.
- International: sales rose 5% (8% ex-FX) to $43.1 billion, and operating income rose to $1.6 billion from $1.2 billion.
- Online stores: sales grew 2% to $68.5 billion, below StreetAccount's $69.68 billion estimate. The Prime Day timing shift hit this line hardest.
- Third-party seller services: sales rose 9% to $46.5 billion, so Marketplace sellers' fees and fulfilment revenue are still growing faster than Amazon's own retail sales.
- Advertising: sales grew 11% to $19.6 billion, short of StreetAccount's $20.82 billion estimate. Amazon expects Q4 advertising growth in the "high teens."
- Subscriptions (mainly Prime): sales rose 11% to $14.0 billion.
The retail business made a lot more money, but it grew slowly in Q3. That is partly the Prime Day effect and partly a mature business.
Capex and free cash flow, explained simply
Capex (capital expenditure) is money spent on long-lasting assets such as data centres, servers, chips, power equipment and warehouses. In Q3, Amazon's purchases of property and equipment totalled $77.3 billion, more than double the $35.1 billion of a year earlier. Some outlets cite $75.9 billion, a slightly different measure. Amazon kept its full-year 2026 cash capex outlook at about $220 billion.
Free cash flow is the cash from operations minus that capex spending. Over the last 12 months, Amazon generated $168.3 billion from operations, up 29%, but spent $210.7 billion net on property and equipment. That leaves a free cash flow outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier. Amazon attributes the decline mainly to AI-related investment.
In plain terms, the core business generates more cash than ever, but Amazon is spending even more on AI infrastructure, ahead of revenue it expects to earn later. Yahoo Finance noted that long-term debt has risen to $173.1 billion from $65.6 billion at the end of 2025.
Q4 2026 guidance
| Item | Q4 2026 guidance | Comparison |
|---|---|---|
| Net sales | $240.0B to $247.0B | +12% to +16% y/y; LSEG consensus $244.5B (midpoint is below) |
| FX impact | About 60 bps unfavourable | n/a |
| Operating income | $28.5B to $33.5B | $25.0B in Q4 2025 |
| Advertising growth | High teens y/y | n/a |
| 2026 cash capex | About $220B | Unchanged |
Why the stock fell
According to the CNBC and Yahoo Finance coverage, several things hit at once:
- EPS and revenue missed, if only slightly: $1.89 vs $1.96 (LSEG) and $201.94 billion vs $202.31 billion (LSEG).
- Spending is rising faster than expected. Q3 capex of $77.3 billion was well above FactSet's $58.7 billion estimate, and Jassy said 2027 spending would be "meaningfully" higher.
- Free cash flow is negative. The trailing figure of -$42.4 billion compares with +$14.8 billion a year ago.
- The guidance midpoint was soft. The Q4 revenue midpoint, about $243.5 billion, came in below LSEG's $244.5 billion consensus.
- Ads and online stores fell short of StreetAccount estimates.
Shares fell more than 6% in extended trading on Thursday (CNBC) and early reports put them about 7% lower premarket on Friday 30 October. Yahoo Finance noted that after the drop, Amazon traded at about 25 times forward earnings, below its five-year average. None of the coverage we checked quoted a named sell-side analyst, so we have not included one. For context on the earlier slide, see why Amazon stock was down in October 2026.
What it means for customers, sellers and employees (editor's take)
This section is opinion and analysis by 9to5Amazon's editor.
- AWS customers: Capacity is tight, but more is coming. With a $578 billion backlog, big AI customers have priority, so smaller teams should plan GPU and Trainium capacity early and look at reserved options.
- Sellers: Third-party services keep growing faster than Amazon's own retail sales, and Amazon expects ad revenue to grow in the high teens in Q4. Expect advertising to cost more over the holidays.
- Shoppers: Q4 guidance suggests a normal holiday season. Nothing in the report points to changes in Prime pricing.
- Employees: Heavy capex and negative free cash flow keep pressure on operating costs elsewhere. Read this alongside our Amazon layoffs October 2026 timeline.
FAQ
What were Amazon's Q3 2026 earnings results?
Amazon reported net sales of $201.9 billion (+12%), operating income of $28.1 billion, net income of $20.7 billion and diluted EPS of $1.89 for the quarter ending 30 September 2026.
Did Amazon beat or miss earnings in Q3 2026?
It missed on both lines. EPS was $1.89 against $1.96 (LSEG) and revenue was $201.94 billion against $202.31 billion (LSEG). AWS beat its estimate.
What was AWS revenue in Q3 2026?
AWS revenue was $46.0 billion, up 39% year over year, with operating income of $17.8 billion. Jassy said the backlog stood at $578 billion.
Why did Amazon stock drop after earnings?
The main reasons were the small EPS and revenue misses, capex well above estimates, a negative trailing free cash flow of $42.4 billion, Jassy's signal of higher 2027 spending, and a Q4 revenue midpoint below consensus.
What is Amazon's Q4 2026 guidance?
Amazon guided net sales of $240.0 billion to $247.0 billion (+12% to +16%) and operating income of $28.5 billion to $33.5 billion. It expects advertising growth in the high teens.
How much is Amazon spending on capex in 2026?
About $220 billion in cash capex for 2026, unchanged from its earlier outlook. Q3 alone was $77.3 billion.
Why did Amazon's net income fall when operating income rose 61%?
Q3 2025 included a $9.5 billion pre-tax gain on Amazon's Anthropic investment, and there was no comparable gain this quarter.
When is Amazon's next earnings report?
Amazon has not confirmed a date yet. Q4 results usually arrive in early February.
Not investment advice. 9to5Amazon is an independent publication and is not affiliated with Amazon.
Sources
- Amazon.com Announces Third Quarter Results (Amazon IR, 29 Oct 2026)
- CNBC: Amazon posts negative free cash flow of $42.4 billion, holds 2026 capex unchanged
- Yahoo Finance: Amazon sinks on earnings miss as Jassy sees AI spending "meaningfully" higher in 2027
- BigGo Finance: AWS backlog hits $578 billion
- Featured image: Amazon AWS us-west-2 Morrow East AZ, Wikimedia Commons, Tedder, CC BY-SA 4.0
Featured image: Tedder / Wikimedia Commons, CC BY-SA 4.0. Source