Amazon’s third-quarter results highlighted the two forces currently shaping its business: sharply accelerating demand for cloud computing and artificial intelligence, and the heavy capital spending required to support that growth. The company reported net sales of $201.9 billion for the three months ended September 30, 2026, up 12% from $180.2 billion a year earlier. Excluding foreign-exchange effects, the increase was 13%.
The strongest growth came from Amazon Web Services. AWS revenue rose 39.3% year over year to $46.0 billion, a pace Amazon said was its fastest in nearly five years. That put the cloud unit on an annualized revenue run rate of roughly $184 billion. AWS operating income increased to $17.8 billion from $11.4 billion in the same quarter last year, making the division an even larger contributor to Amazon’s overall profitability.
Amazon’s consolidated operating income reached $28.1 billion, compared with $17.4 billion a year earlier, while its operating margin climbed to a record 13.9%. North America sales increased 6% to $112.9 billion. International sales rose 5% to $43.1 billion, or 8% when currency movements were excluded. These figures show that the company’s cloud business expanded much faster than its retail operations during the quarter.
Net income was $20.7 billion, or $1.89 per diluted share, compared with $21.2 billion, or $1.95 per diluted share, a year earlier. The comparison was affected by a $9.5 billion pre-tax valuation gain related to Amazon’s investment in Anthropic that was recorded in the 2025 quarter. The Associated Press reported that quarterly revenue and earnings per share were below analysts’ expectations, while Amazon shares fell more than 5% in after-hours trading following the release.
The most important pressure point was free cash flow. Operating cash flow for the trailing 12 months increased 29% to $168.3 billion, demonstrating that Amazon’s core operations continued to generate substantial cash. However, trailing-12-month free cash flow moved to an outflow of $42.4 billion from an inflow of $14.8 billion a year earlier. Amazon attributed the reversal primarily to a $94.8 billion year-over-year increase in purchases of property and equipment, reflecting investments in artificial intelligence infrastructure.
That distinction matters: Amazon did not report an operating cash loss. Instead, its positive operating cash generation was more than absorbed by data-center and other capital expenditures. Reuters reported quarterly capital spending of about $77.3 billion, well above analysts’ expectations. Amazon said it now expects 2026 cash capital expenditures of approximately $220 billion as it expands computing capacity for AI and cloud services.
For the fourth quarter, Amazon forecast net sales between $240 billion and $247 billion, representing growth of 12% to 16% from the same period a year earlier. The range includes the average analyst estimate cited by Reuters, although its lower end points to a cautious holiday-quarter outlook. Amazon projected fourth-quarter operating income of $28.5 billion to $33.5 billion.
The quarter therefore delivered a mixed but clear signal. AWS is growing at its fastest rate in years and is producing more operating profit, but the infrastructure needed to sustain that momentum is consuming cash at an exceptional pace. Investors will now watch whether faster cloud revenue can translate into stronger free cash flow once the current wave of AI-related construction and equipment purchases begins to moderate.
