Amazon Shares Fall After Q3 Sales and Earnings Miss Estimates, Even as AWS Grows 39 Percent

Updated 20:52 UTC: Amazon has reported its third quarter results. This article has been updated with the reported figures, the company guidance and the market reaction.

Amazon reported third quarter net sales of $201.9 billion on Thursday, up 12 percent from a year earlier, and earnings of $1.89 a share. Both figures came in just below Wall Street estimates. Analysts polled by FactSet had expected earnings of $1.97 a share on sales of about $202.2 billion. Net income was $20.7 billion, down from $21.2 billion a year earlier, when results included pretax gains of $9.5 billion from Amazon's investment in Anthropic, according to the company. Amazon shares fell about 7 percent in after-hours trading.

AWS carries the quarter

Amazon Web Services was the strongest part of the report. AWS net sales reached $46 billion, up 39 percent from a year earlier, the fastest growth pace in nearly five years. AWS now runs at an annualized revenue rate of about $184 billion and accounts for roughly 63 percent of the company's operating profit. Group operating income rose to $28.1 billion, up from $17.4 billion a year earlier and above the $26.1 billion analysts had expected, giving Amazon its highest operating margin on record at about 13.9 percent.

The bill for the AI buildout

The costs of the artificial intelligence buildout ran through the rest of the report. Capital spending reached $77.3 billion in the quarter, well above estimates near $57.5 billion, and Amazon held its full year 2026 capital expenditure plan at about $220 billion. Free cash flow over the past twelve months swung to an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier. Long term debt has nearly tripled since December to about $173 billion, and quarterly interest expense more than tripled to $1.7 billion.

For the fourth quarter, Amazon guided net sales of $240 billion to $247 billion and operating income of $28.5 billion to $33.5 billion. The midpoint of the operating income range, about $31 billion, sits below the $33.2 billion analysts had anticipated.

What investors were watching

Chief executive Andy Jassy told an Andreessen Horowitz event on October 23 that AWS capacity was sold out for 2026 and largely sold out for 2027, with a substantial share of 2028 also committed. The third quarter covers July to September. Prime Day ran from June 23 to 26 this year, in the second quarter instead of July, a shift Amazon has said pulls sales out of the third quarter comparison and makes the reported growth rate look about 400 basis points lower than the underlying rate.