Amazon reported third-quarter 2026 results on Thursday showing Amazon Web Services sales up 39% year over year to $46.0 billion, the fastest-growing piece of a company whose total net sales rose 12% to $201.9 billion. The cost of that growth showed up in the cash flow statement: Amazon spent $77.3 billion on property and equipment in the quarter, more than double the $35.1 billion it spent a year earlier.
Operating income climbed to $28.1 billion from $17.4 billion, an operating margin of 13.9%. Net income fell to $20.7 billion, or $1.89 per diluted share, from $21.2 billion, or $1.95, a year earlier. The prior-year quarter included a one-time $9.5 billion pre-tax gain tied to Amazon's investment in Anthropic, which accounts for most of the decline.
AWS carried the profit line. The cloud segment posted $17.8 billion in operating income, more than 60% of Amazon's total. North America sales rose 6% to $112.9 billion with $8.7 billion in operating income, and International sales rose 5% to $43.1 billion, or 8% excluding currency effects, with $1.6 billion in operating income.
Key facts
- 01AWS net sales rose 39% to $46.0B in Q3 2026, with segment operating income of $17.8B.
- 02Amazon's total net sales grew 12% to $201.9B; diluted EPS was $1.89 versus $1.95 a year earlier.
- 03Purchases of property and equipment reached $77.3B in the quarter, up from $35.1B a year earlier.
- 04Trailing-twelve-month free cash flow was a $42.4B outflow, compared with a $14.8B inflow a year ago.
- 05Q4 guidance calls for net sales of $240B to $247B and operating income of $28.5B to $33.5B.
CEO Andy Jassy said in the earnings release that AWS's investment in functionality and infrastructure is working, putting the business at a $184 billion revenue run rate. He said Amazon projects AWS revenue growth of over 40% in both 2027 and 2028.
“There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years.”— Andy Jassy, Amazon CEO
Amazon listed new AWS agreements with Meta, Nvidia, OpenAI and Oracle during the quarter. On Amazon Bedrock, its managed model service, spending by Fortune 500 companies grew nearly 7x year over year and token volume grew nearly 17x. Bedrock added models from OpenAI, Anthropic, Moonshot AI, SpaceXAI and Z.ai, along with built-in web search for OpenAI models.
Agent tooling was a recurring theme. Amazon said tens of thousands of customers now use Bedrock AgentCore, and that they deployed twice as many agents in the third quarter as in the prior three quarters combined. AWS also launched a public preview of Bedrock Managed Agents, released the Strands agent harness, previewed an open source sandbox called Strands Box, and shipped TorchNeuron, which lets PyTorch code run on its Trainium chips without rewriting.
Other AWS moves in the quarter included general availability of AWS Continuum, an AI-powered vulnerability security service, the acquisition of DuckLabs, the company behind the DuckDB database, and a $1 billion annualized revenue run rate for AWS Lambda.
The spending is now larger than the cash Amazon's operations generate. Operating cash flow over the trailing twelve months rose 29% to $168.3 billion, but purchases of property and equipment over the same period reached $215.2 billion, up from $120.1 billion. Trailing free cash flow was an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier.
For the fourth quarter, Amazon guided to net sales of $240 billion to $247 billion, growth of 12% to 16%, and operating income of $28.5 billion to $33.5 billion. Revenue for the third quarter landed just below the roughly $202.3 billion analysts expected, and earnings per share came in under the $1.96 consensus.
Amazon shares were initially down about 8% in after-hours trading following the report. The stock had been down nearly 4% during Thursday's regular session, a day after Alphabet shares dropped more than 12% following its own quarterly results.
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