Amazon Q3 Revenue Growth Slows; AWS Grows Nearly 40%, AI Spending Pressures Cash Flow

【Ebrun Original】October 30 — Amazon released its financial results for the third quarter of 2026. During the reporting period, the company's net sales reached $201.944 billion, up 12% year-over-year, or 13% excluding the impact of foreign exchange rates. Net income was $20.718 billion, down about 2% year-over-year, while operating income reached $28.076 billion, up 61% year-over-year, with an operating margin of 13.9%, a record high.

In terms of business performance, AWS became the primary growth engine in the quarter, with net sales rising 39.3% year-over-year to $46 billion, the fastest growth rate in nearly five years; North America segment sales grew 6% to $112.9 billion, and International segment sales grew 5% to $43.1 billion, or 8% excluding the impact of foreign exchange rates.

01 Prime Day Timing Shift Weighs on Online Retail and Advertising Growth

The financial report showed that Amazon's third-quarter net sales growth rate was lower than the 20% recorded in the previous quarter. The company explained that Prime Day in most major markets was moved from the third quarter to the second quarter this year, whereas all Prime Day events in 2025 fell in the third quarter. Amazon estimated that excluding this timing change, sales growth for the quarter would have been about 4 percentage points higher year-over-year.

By segment, online stores sales were $68.47 billion, up 2% year-over-year; third-party seller services revenue was $46.492 billion, up 9% year-over-year; and advertising services revenue was $19.637 billion, up 11% year-over-year. Third-party seller services revenue includes commissions, related fulfillment and shipping fees, and is not equivalent to the merchandise sales of third-party sellers on the platform.

Advertising growth was also affected by the Prime Day timing shift. Amazon said the change in the timing of the major sales event had an approximately 850-basis-point sequential impact on advertising revenue growth year-over-year, while the incremental benefit from last year's search marketing strategy adjustments also began to enter the year-over-year comparison base. The company expects fourth-quarter advertising revenue growth to recover to the high-teens percentage range.

02 AWS Accelerates Growth as AI Infrastructure Investment Continues to Expand

AWS revenue reached $46 billion in the quarter, with operating income of $17.8 billion and an operating margin of 38.7%. Amazon CEO Andy · Jassy said on the earnings call that AWS currently has an annualized revenue run rate of about $184 billion and expects AWS revenue growth to exceed 40% in both 2027 and 2028. He also said AWS is expected to become a business with annual revenue exceeding $1 trillion in the next five to ten years.

On the cost side, Amazon's third-quarter cash capital expenditure was $75.9 billion. The company maintained its expectation of approximately $220 billion in full-year 2026 cash capital expenditure and expects 2027 capital expenditure to be "significantly higher" than 2026. Amazon said these investments are primarily directed toward AWS and AI infrastructure to meet customer demand.

Heavy investment is also beginning to show in cash flow. For the trailing 12 months ended September 30, Amazon's operating cash flow grew 29% year-over-year to $168.3 billion, but free cash flow was negative $42.4 billion, compared with positive free cash flow of $14.8 billion in the same period last year. The company said the change in cash flow was mainly due to increased AI-related capital expenditure.

03 Platform Accelerates Fulfillment and Seller Tool Development

The financial report also noted that in the third quarter, more than 1.5 billion items were delivered to Prime members on the same day or the next day, a record high for the comparable period; Amazon Now has covered more than 450 towns and cities globally, with related order volume up 10-fold year-over-year. Sales of fresh food and everyday essentials grew about three times as fast as Amazon's overall stores, accounting for about half of the units sold in the quarter.

On seller tools, Amazon said Seller Assistant has launched workflows for restocking and pricing, among others, and added the ability to manage product information, orders and profitability across channels. In advertising, Amazon Ads Agent was launched, integrating search, display, video and streaming TV advertising into a single platform, with AI assisting in planning and optimizing advertising campaigns.

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