Amazon Q3: AWS Grows 39% as 12-Month Free Cash Flow Turns Negative

What happened

The results cover the quarter ended Sept 30 and were released after the close on Oct 29. Group net sales were $201.944 billion, up 12% year over year and 13% excluding currency effects, below the $202.310 billion LSEG consensus; diluted earnings per share were $1.89, below the $1.96 expected; net income was $20.685 billion, down from $21.187 billion a year earlier. Amazon said the year-earlier net income included a $9.5 billion pre-tax gain related to its Anthropic investment.

AWS was the fastest-growing line in the report: revenue of $45.984 billion, up 39.3% year over year, above the $45.29 billion analysts expected and faster than about 37% in the second quarter, the quickest pace in nearly five years; operating income of $17.773 billion, up 55%, for a 38.7% operating margin, above 34.6% a year earlier and below 39.4% in the second quarter. Group operating income was $28.076 billion, up 61%, for a 13.9% operating margin.

On cash and guidance: third-quarter purchases of property and equipment were $77.259 billion; trailing-12-month free cash flow was negative $42.357 billion, against positive $14.788 billion a year earlier. Amazon kept its 2026 cash capital expenditure expectation at about $220 billion and guided fourth-quarter net sales to $240 billion to $247 billion, up 12% to 16% year over year. CEO Andy Jassy said on the call that AWS revenue growth would exceed 40% in both 2027 and 2028 and put the AWS backlog at $578 billion.

Key facts

Net sales: $201.944 billion, up 12% year over year, below the $202.310 billion LSEG consensus.

Earnings and net income: diluted EPS of $1.89, below the $1.96 expected; net income of $20.685 billion, down from $21.187 billion a year earlier.

AWS: revenue of $45.984 billion, up 39.3%, above the $45.29 billion expected; operating income of $17.773 billion, up 55%, for a 38.7% operating margin.

Free cash flow: trailing-12-month outflow of $42.357 billion, against a $14.788 billion inflow a year earlier; third-quarter property and equipment purchases of $77.259 billion.

Capex and guidance: 2026 cash capital expenditure expectation held at about $220 billion; fourth-quarter net sales guided to $240 billion to $247 billion.