Amazon Q3 earnings beat Wall Street forecasts on Thursday, October 29, 2026, as its cloud division AWS surged 39% to $46 billion in sales and the company set a strong holiday-season outlook, even as its headline profit slipped from a year earlier because of a one-off investment gain in 2025. The results, reported after the market close, put Amazon at the centre of the busiest week of the Big Tech earnings season, days after the Federal Reserve cut interest rates and hours after rival Alphabet disappointed investors with its own heavy artificial intelligence spending.
Net sales rose 12% to $201.9 billion in the third quarter ended September 30, 2026, just below the roughly $202.3 billion analysts had expected, while operating income jumped to $28.1 billion from $17.4 billion a year earlier — Amazon's highest operating margin ever, at 13.9%. AWS, the engine of Amazon's profits, grew 39.3% to a $184 billion annualised revenue run rate, its fastest pace in nearly five years. Net income fell to $20.7 billion, or $1.89 per diluted share, from $21.2 billion, or $1.95 a share, a year earlier — a decline driven almost entirely by $9.5 billion of pre-tax gains booked in the third quarter of 2025 from Amazon's investments in Anthropic, the maker of the Claude AI assistant.
Amazon reported its third-quarter results after the close on Thursday, October 29, 2026, closing out a week in which Microsoft gained after beating estimates and Alphabet fell sharply after missing on both earnings and revenue while reporting negative free cash flow. Investors had set a high bar for Amazon: analysts expected revenue of about $202.3 billion, earnings per share of about $1.96 and AWS revenue near $45.6 billion, with the cloud unit expected to grow around 38%.
On the headline numbers, Amazon landed just short of the revenue consensus and below the earnings-per-share consensus — but the misses came with explanations that mattered more than the headlines. Prime Day, Amazon's flagship sales event, moved into the second quarter for most large countries this year, whereas in 2025 it fell entirely in the third quarter. Amazon said that shift alone held back third-quarter growth by roughly 400 basis points, meaning underlying growth would have been about four percentage points higher on a like-for-like basis. Foreign exchange was a further $0.9 billion drag; excluding currency moves, sales rose 13% rather than 12%.
The segment breakdown showed where the strength sat. North America sales rose 6% to $112.9 billion, with operating income nearly doubling to $8.7 billion from $4.8 billion. International sales rose 5% to $43.1 billion — 8% excluding currency — with operating income of $1.6 billion, up from $1.2 billion. AWS sales rose 39% to $46.0 billion, and its operating income climbed to $17.8 billion from $11.4 billion, a margin of about 39% that matched the most optimistic analyst forecasts.
Cash flow told the other side of the AI story. Operating cash flow rose 29% to $168.3 billion over the trailing twelve months, but free cash flow swung to an outflow of $42.4 billion from an inflow of $14.8 billion a year earlier, because purchases of property and equipment jumped by $94.8 billion year over year — almost entirely spending on data centres and other AI infrastructure. That spending is the question hanging over every Big Tech report this season: whether the hundreds of billions pouring into AI capacity will turn into durable cash returns.
Amazon entered the report under unusual pressure. The company had raised its 2026 capital spending guidance to about $220 billion earlier in the year, up from roughly $200 billion at the start of the year, citing higher memory-chip costs and surging AI demand. On October 23, chief executive Andy Jassy said AWS capacity was sold out for 2026, largely sold out for 2027 and substantially committed for 2028 — shifting the debate from whether customers want AI capacity to how fast Amazon can build it.
The third quarter also unfolded against a shifting economic backdrop. The Federal Reserve cut its benchmark rate by 25 basis points on Wednesday, October 28, to a range of 3.75% to 4.00%, its second cut of the year, while acknowledging that inflation remains elevated. September inflation had run at 3.7%, and the Fed signalled a further increase in December was possible. For Amazon, cheaper borrowing helps fund its data-centre build-out, but household budgets remain squeezed, and the holiday quarter will test whether consumers keep spending.
Amazon's own history framed the numbers too. The company has beaten analyst revenue estimates in eight straight quarters, but its earnings-per-share record is more mixed, in part because its results include gains or losses on its Anthropic stake that analysts cannot forecast. In the second quarter of 2026, a $53.4 billion pre-tax Anthropic-related gain lifted earnings per share to $5.75. The year-ago third quarter included a $9.5 billion Anthropic gain, which is why the year-on-year profit comparison looks negative even as the operating business improved sharply.
The report also landed in a week of big AI spending announcements. Meta unveiled a $95 billion fundraising plan, and a single day saw roughly $198 billion of AI-related spending commitments across the industry. Amazon's $220 billion capital programme sits at the top of that league table, and its ability to convert that spending into AWS growth — 39% this quarter, against 37% in the second quarter and 36.7% in the quarter before that — is now the central test for the stock.
AWS was unambiguously the story of the quarter. Sales of $46.0 billion beat the roughly $45.6 billion consensus, growth accelerated to 39.3% — its fastest in nearly five years — and Jassy said growth is projected above 40% in both 2027 and 2028. Amazon's Bedrock AI service, which lets companies run frontier AI models on AWS, saw spending by Fortune 500 customers rise nearly sevenfold year over year, while total Bedrock token volume grew nearly 17 times. Tens of thousands of customers now use Bedrock AgentCore, Amazon's managed service for building AI agents, and deployed twice as many agents in the third quarter as in the prior three quarters combined.
Amazon also widened its AI model menu, adding OpenAI's GPT-6 family, Anthropic's Claude Fable 5.1, Opus 5.5, Sonnet 5.5 and Haiku 5.5, Moonshot AI's Kimi K3, SpaceX AI's Grok 4.7 and Z.ai's GLM 5.3, alongside two purpose-built cybersecurity models from OpenAI. New AWS agreements signed in the quarter included Meta, NVIDIA, OpenAI, Salesforce, Oracle, Qualcomm, Verizon, ADP, Stripe, NATO and Columbia University's Irving Medical Center. The company's Lambda serverless offering topped a $1 billion annualised revenue run rate, used by Samsung, Volkswagen, United Airlines, Mercedes-Benz and Booking.com.
The retail business, by contrast, grew more modestly. North America sales rose 6% and international sales 5%, held back by the Prime Day shift and currency. Amazon said it delivered its fastest third-quarter speeds ever for Prime members, with more than 1.5 billion items arriving same-day or overnight, and that its Amazon Now ultra-fast delivery service is now in more than 450 towns and cities worldwide, with orders up tenfold year over year. Grocery grew about three times faster than the rest of the store and now represents about half of all units sold. Alexa for Shopping, its agentic shopping assistant, was used by more than 400 million customers in the last twelve months, with interactions up 570% year over year, and Amazon Pharmacy now offers three-hour prescription delivery in more than 350 cities, with customer numbers up more than 60%.
Newer bets also featured prominently. Amazon said it remains on track to begin initial service of its Amazon Leo low-Earth-orbit satellite service later this year, with AT&T as the first major US telecom provider to offer Leo connectivity to business customers. Its Zoox autonomous robotaxis began paid rides in Las Vegas and are testing in San Diego and Houston, operating in twelve US cities. Amazon MGM Studios passed $1.2 billion in global box office so far in 2026, and Prime Video's Thursday Night Football averaged 17.7 million viewers through six games, its best start ever.
Chief executive Andy Jassy struck an upbeat tone on the cloud business. "Our AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenue growth in Q3 ($184 billion revenue run rate) and projected revenue growth rates of over 40% both in 2027 and in 2028," Jassy said. "Our broader selection and speedier delivery are helping us capture more retail market segment share with improving margins, and our newer businesses, ranging from Grocery to Pharmacy to Amazon Leo to Zoox are progressing encouragingly. There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years."
Market reaction was more cautious. Market data showed Amazon shares slipping about 4% in after-hours trading after the report, with the stock easing from its $254.60 close on Wednesday, October 28, toward roughly $244 — a familiar pattern this earnings season, in which even strong cloud numbers have been punished when cash flow or spending guidance disappoints. Alphabet shares had fallen sharply a day earlier on similar concerns, while Microsoft gained after beating estimates. Analysts had warned before the report that elevated expectations were a risk: Bank of America had forecast AWS growth of 40% and a 39% operating margin, but cautioned that investors hoping for 42% or more could be disappointed.
The broader debate is now about the AI spending cycle itself. Amazon's free cash flow outflow of $42.4 billion over twelve months, against an inflow of $14.8 billion a year earlier, shows how much of the AI boom is being funded from the balance sheet rather than from current cash generation. Supporters point to AWS growth accelerating for a third straight quarter and to capacity being sold out years ahead. Sceptics note that the same logic applied to Alphabet, whose shares fell despite strong cloud growth, and argue that the market is now demanding proof that AI spending converts into profit, not just revenue.
Amazon's quarter matters beyond its own shareholders because it is a bellwether for three of the biggest forces in the US economy: consumer spending, cloud computing and AI investment. As one of the largest US employers and retailers, its holiday guidance is read as a forecast for American consumers. As the world's largest cloud provider, its AWS growth sets the pace for the entire AI infrastructure trade. And as the biggest spender on data centres, its capital programme influences everything from memory-chip prices to electricity demand in the communities hosting its facilities.
The holiday guidance is the most consequential number in the report. Amazon expects fourth-quarter net sales of $240 billion to $247 billion, up 12% to 16% from a year earlier, and operating income of $28.5 billion to $33.5 billion, against $25.0 billion in the fourth quarter of 2025. Advertising revenue, which grew 12% excluding currency in the third quarter despite the Prime Day timing effects, is expected to grow in the high teens in the fourth quarter. If Amazon hits the top of that range, it would cap a year in which the company grew through tariffs, elevated inflation and a Federal Reserve still wrestling with price pressures.
The report also matters for workers. Amazon announced plans to hire more than 300,000 seasonal, part-time and full-time employees across its US operations this holiday season, and said it had invested more than $1.5 billion to raise minimum starting pay for US full-time operations employees to $20 an hour, alongside a new grocery discount and lifetime banking benefit. With weekly jobless claims hovering near 57-year lows and the labour market described by economists as "low-hire, low-fire", Amazon's seasonal hiring is one of the clearest real-time signals of how tight the jobs market remains heading into Christmas.
Attention now turns to the holiday quarter and to Amazon's capital spending. The company gave no new full-year capital spending figure in the release, leaving the roughly $220 billion guidance as the number to watch on the earnings call and in the months ahead. Any increase would test investor patience, as it did for Alphabet; holding spending steady while AWS growth stays above 35% would be read as the best-case outcome. Amazon also faces a data-centre capacity race: with AWS sold out for 2026 and largely committed for 2027, the pace at which it can bring new facilities online will decide whether its projected 40%-plus growth in 2027 and 2028 is achievable.
On the retail side, the fourth quarter will show whether the Prime Day shift flattered or distorted the underlying trend. The holiday guidance implies a strong finish, but it must be delivered against 3.7% inflation, elevated interest rates even after the Fed's cut, and a consumer that has proved resilient yet price-sensitive. Amazon's grocery expansion, its same-day delivery network and its Alexa shopping assistant are all bets that convenience and speed can win share even when budgets are tight.
Investors will also watch the Anthropic effect. Because Amazon's stake in Anthropic can swing reported earnings by tens of billions of dollars in a single quarter, headline earnings per share will remain volatile and hard to compare. The cleaner measures — operating income, AWS operating income and free cash flow — will matter more. On those measures, the third quarter was strong on the first two and weak on the third, and the tension between them is likely to define Amazon's stock for the rest of the year.
Did Amazon beat expectations in Q3 2026? On operating performance, yes: sales of $201.9 billion were just below the roughly $202.3 billion consensus, but operating income of $28.1 billion and AWS growth of 39% beat expectations, and the profit decline was caused by a $9.5 billion Anthropic gain in the year-ago quarter.
How fast did AWS grow? AWS sales rose 39% — 39.3% on the company's precise figure — to $46.0 billion, its fastest growth in nearly five years, reaching a $184 billion annualised run rate, with operating income of $17.8 billion.
Why did Amazon's net income fall if business improved? Because the third quarter of 2025 included $9.5 billion of pre-tax gains from Amazon's Anthropic investments. Excluding that one-off, the operating business improved sharply, with operating income up from $17.4 billion to $28.1 billion.
What is Amazon's holiday guidance? Fourth-quarter net sales of $240 billion to $247 billion, up 12% to 16% year over year, and operating income of $28.5 billion to $33.5 billion, versus $25.0 billion a year earlier.
Why did Amazon shares fall after strong AWS numbers? Market data showed shares slipping about 4% in after-hours trading, reflecting concern about the $42.4 billion twelve-month free cash flow outflow driven by AI data-centre spending — the same concern that hit Alphabet a day earlier.
Related coverage on US News Pulse: Big Tech earnings test: Alphabet, Amazon and Apple face AI spending verdict, Meta $95 billion AI raise leads a $198 billion day of AI spending, and Anthropic IPO filing: Claude maker seeks Nasdaq listing as ANT in $2 trillion test.
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