Amazon Earnings Q3 2026: AWS Grows 39% as AI Spending Hits $77 Billion a Quarter

Updated October 30, 2026. This is a live story: analyst estimates and share prices are still moving, and figures may change as Amazon files its full quarterly report.

Amazon's Q3 2026 earnings, reported on Thursday, October 29, came down to two numbers. AWS, Amazon's cloud business, grew 39%, its fastest pace in nearly five years. And Amazon spent $77.3 billion on property and equipment in a single quarter, spending its finance chief says relates primarily to AWS and AI.

That spending is why Amazon's free cash flow, the cash left after paying for all that building, swung to an outflow of $42.4 billion over the past twelve months. A year earlier it was an inflow of $14.8 billion. This piece explains what Amazon reported, what the AI money is actually buying, how AWS stacks up against Microsoft Azure and Google Cloud, and what the race means for AI prices and the people who use AI tools.

This article explains what the companies reported. It is not investment advice.

Amazon earnings Q3 2026: the short version

• Revenue rose 12% to $201.94 billion. That was slightly below the roughly $202.1 billion analysts expected, according to Investing.com. Amazon says Prime Day moving mostly into the second quarter cut growth by about 4 percentage points.
• AWS revenue rose 39% to $45.98 billion. That beat estimates of about $45.4 billion, according to estimates compiled by INDmoney. AWS earned $17.8 billion in operating profit, about 63% of Amazon's total.
• Amazon's capex hit $77.3 billion in the quarter, more than double the $35.1 billion a year earlier. Amazon still expects about $220 billion of cash capital spending in 2026.
• Free cash flow went negative: −$42.4 billion over the trailing twelve months, because spending grew far faster than the cash coming in.
• Ad revenue was $19.64 billion, up 11%, below the roughly $20.9 billion in estimates compiled by INDmoney. Amazon blamed timing, mainly Prime Day.
• The AWS backlog reached $578 billion, up from $496 billion at the end of June, according to Jassy on the earnings call.
• Andy Jassy called outside AI shopping agents "still not great, nor more convenient than coming to a retailer directly," according to Fortune.
• Shares fell about 6% after hours to $228.90, according to Investing.com, after closing down 4.25% in regular trading.

Amazon's AI spending race in 2026: the timeline

Amazon has raised its spending plan through the year while AWS growth sped up each quarter. Press play to watch the year's spending build.

Amazon Q3 2026 earnings: the numbers

Amazon's operating income, the profit from running the business before interest and taxes, jumped to $28.1 billion from $17.4 billion a year earlier. The operating margin of 13.9% is the highest Amazon has ever reported, according to the company. The Motley Fool notes that the year-ago quarter carried about $2.9 billion in one-off costs, which flatters the comparison.

Net income actually dipped, to $20.7 billion from $21.2 billion. Amazon says that's mainly because the year-ago quarter included $9.5 billion of pre-tax gains on its investment in Anthropic, the AI lab behind Claude. Diluted earnings per share were $1.89, short of the roughly $1.96 consensus cited by Investing.com.

Did Amazon beat earnings expectations?

It was mixed. AWS beat. Total revenue, earnings per share and advertising came in a little light. Shares had already fallen 4.25% during Thursday's session, then dropped another 6.11% after hours, according to Investing.com.

AWS revenue: the fastest growth in nearly five years

AWS revenue was $45.98 billion, up from $33.0 billion a year earlier. Its growth rate has risen every quarter this year: 28% in the first quarter, 37% in the second and 39% now.

Jassy said AWS is now a $184 billion "annualized run rate" business, meaning the latest quarter's sales multiplied out over a full year. In the earnings release he said he expects AWS growth above 40% in both 2027 and 2028. He also wrote that no company has ever had a business with $1 trillion in yearly revenue, and that Amazon may have two within five to ten years.

The backlog matters too. A backlog is revenue customers have signed contracts for but AWS hasn't delivered yet. It stood at $578 billion, and Jassy said it is growing at triple-digit rates year over year. On the call he said some large customers reserve capacity in blocks of hundreds of megawatts, sometimes up to a gigawatt, well in advance.

Advertising: the soft spot

Advertising revenue rose 11% (12% excluding currency moves) to $19.64 billion. Amazon said timing, primarily Prime Day, distorted the comparison, and it expects ad revenue to grow in the high teens in the fourth quarter. Jassy told analysts that outside AI shopping agents did not cause the shortfall, according to Fortune.

Amazon capex: what $77 billion a quarter buys

"Capex" is short for capital expenditure: money spent on long-lived things like buildings, land and equipment, rather than day-to-day costs. Amazon's cash flow statement shows it spent $44.2 billion on property and equipment in the first quarter of 2026, $54.2 billion in the second and $77.3 billion in the third. That's $175.7 billion in nine months, against $131.8 billion in all of 2025. (Net of asset sales and incentives, the third-quarter figure was $75.9 billion, the number CFO Brian Olsavsky cited on the call.)

Olsavsky said the spending relates primarily to AWS and AI. Jassy said most of the roughly $220 billion planned for 2026 is for AWS. Amazon didn't give a line-by-line split, but its statements point to three main buckets.

Data centres and long leases

AI models need huge, power-hungry buildings full of servers. Jassy said most of Amazon's capacity is either owned or held on long leases, and that large customers book their capacity well in advance. In practice, Amazon pays for buildings, power and equipment before that capacity starts earning revenue. That timing gap is behind the cash flow numbers below.

Chips: Nvidia GPUs and Amazon's own Trainium

The key part inside an AI data centre is the accelerator, a chip built to do the maths behind AI models far faster than a normal processor. Nvidia's GPUs dominate this market: TechTimes puts Nvidia's share at an estimated 81% to 90%. Amazon also designs its own accelerator, Trainium.

On the call, Jassy said Amazon is installing an AI accelerator roughly every 14 seconds. He said most of Amazon Bedrock, the AWS service businesses use to run AI models from different labs, now runs on Trainium. He said customers' revenue commitments for Trainium and for Graviton, Amazon's own general-purpose processor, each grew more than 20 times year over year. He also said Amazon plans to start selling Trainium outside AWS in late 2027, according to the call transcript and TechTimes.

Memory prices pushed the bill up

AI servers also need large amounts of memory, and memory got more expensive this year. When Amazon raised its 2026 spending plan from about $200 billion to about $220 billion in July, Silicon UK reported that the company pinned the increase on surging memory prices.

Why Amazon's free cash flow turned negative

Free cash flow is the cash a company generates from its operations minus what it spends on property and equipment. Amazon's operating cash flow over the past twelve months was strong: $168.3 billion, up 29%. But its property and equipment spending, net of sales and incentives, was $210.7 billion over the same period. The difference is the $42.4 billion outflow.

One detail is easy to miss: the −$42.4 billion covers twelve months, not just the third quarter. It has fallen fast. Free cash flow was $11.2 billion when Amazon reported in February, $1.2 billion in April and −$7.6 billion in July.

Amazon is also borrowing more. Long-term debt has nearly tripled since December to about $173 billion, and quarterly interest expense has more than tripled to $1.7 billion, according to The Motley Fool.

Amazon frames this as a timing gap. Back in April, Jassy said free cash flow comes under pressure in the early years when capex grows much faster than revenue, as it does now, according to Yahoo Finance. On Thursday's call he said Amazon is working to speed up the payback on its capex, expects AWS to become a larger free-cash-flow business, and can fund its plan. He also said Amazon expects to spend meaningfully more in 2027 than in 2026.

AWS vs Azure vs Google Cloud: who is growing fastest?

Microsoft and Alphabet both reported a day earlier, on October 28, for the same July-to-September quarter. AWS is still the biggest of the three by revenue, but it is growing more slowly than its two main rivals.

• Microsoft Azure: Azure revenue increased 48%, to about $33.2 billion, in Microsoft's fiscal first quarter of 2027, which ended September 30.
• Google Cloud: revenue rose 103% to $30.7 billion, from $15.2 billion a year earlier. Sundar Pichai credited strong demand for Google's AI infrastructure and for its TPU systems, Google's own AI chips.
• AWS: revenue rose 39% to $45.98 billion. That's about $12.8 billion more than Azure and $15.3 billion more than Google Cloud in the quarter.

All three are spending heavily. In the quarter, Amazon spent $77.3 billion on property and equipment, Alphabet $51.4 billion and Microsoft $39.4 billion, according to their cash flow statements. That's about $168 billion between them in three months. Leases and accounting differ between companies, so treat this as a rough comparison.

Andy Jassy on AI shopping agents: "still not great"

The AI race isn't only about cloud. It's also about who controls shopping. Meta launched an AI assistant called Muse in early September, and Mark Zuckerberg said shopping is its most common use. Amazon blocked Muse from its store that month, saying its access would break the conditions of use customers agree to, Fortune reported.

On the call, Jassy said few customers are shopping through outside agents yet, and that the experience is still not great or more convenient than going to a retailer directly. He said Amazon believes its own assistant, Alexa for Shopping, will be the main agent people use to shop Amazon.

Amazon says more than 400 million customers used Alexa for Shopping in the last twelve months. Jassy said US customers who use it spend 50% more per order than those who don't, according to Fortune.

What Amazon's AI spending means for AI prices and users

For most people, this spending shows up in the AI tools they use, many of which run on rented cloud hardware. Here's what Amazon's own statements suggest:

• Running AI is getting cheaper. "Inference" is the work a model does each time it answers a request. Jassy said inference costs have come down a lot over the past couple of years and he expects them to come down meaningfully more.
• Amazon is using its own chips to hold prices down. Jassy said running most of Bedrock on Trainium lets AWS keep prices as low as possible for customers.
• But some inputs are getting pricier. Rising memory prices were the reason Amazon gave for adding about $20 billion to its 2026 plan in July, according to Silicon UK.
• Capacity is still tight. Jassy said demand for AWS capacity remains exceptionally strong. When capacity is scarce, the AI apps that rent it compete for the same supply.
• More model choice for builders. Amazon says Bedrock added OpenAI's GPT-6 series, Anthropic's Claude 5.x models and models from Moonshot AI and Z.ai this quarter. It says Fortune 500 spending on Bedrock rose nearly 7 times year over year and token volume nearly 17 times.
• Consumer AI is spreading. Alexa+ expanded to Australia, India and Japan and is now free for US customers with compatible Fire TV devices, according to Amazon.

None of this guarantees lower prices for any particular AI app. Each provider sets its own prices. But all three big clouds are racing to add capacity, and Amazon's management says it expects the cost of running AI to keep falling.

What to watch next

• Q4 2026: Amazon guided net sales of $240 billion to $247 billion (up 12% to 16%) and operating income of $28.5 billion to $33.5 billion.
• Capex in 2027: Jassy said it will be meaningfully higher than 2026's roughly $220 billion. No figure yet.
• Trainium outside AWS: sales to outside customers are targeted for late 2027.
• Free cash flow: whether new data centres start earning fast enough to turn it back up.

Test yourself: Amazon earnings quiz

Amazon earnings FAQ

When was Amazon's Q3 2026 earnings report?

Amazon reported its third-quarter 2026 results after the US stock market closed on Thursday, October 29, 2026, and held its earnings call later that day. The quarter covers July 1 to September 30, 2026. Microsoft and Alphabet reported their results for the same three months a day earlier, on October 28.

Did Amazon beat earnings expectations?

Partly. AWS revenue of $45.98 billion beat estimates of about $45.4 billion. But total revenue of $201.94 billion was slightly below the roughly $202.1 billion expected, earnings per share of $1.89 missed a consensus of about $1.96, and ad revenue fell short. Shares fell about 6% after hours.

How much revenue does AWS make in 2026?

AWS made $45.98 billion in Q3 2026, after about $37.6 billion in Q1 and $42.2 billion in Q2. That's roughly $126 billion in the first nine months. Andy Jassy describes AWS as a $184 billion annualized run-rate business, based on its latest quarter.

What is Amazon's capex for 2026?

Amazon expects about $220 billion in cash capital expenditures in 2026, up from about $200 billion planned in February. The increase was announced in July and pinned on memory prices. Amazon spent $175.7 billion on property and equipment in the first nine months, including $77.3 billion in the third quarter.

Why is Amazon's free cash flow negative?

Because spending grew much faster than cash from operations. Over the twelve months to September 30, Amazon brought in $168.3 billion from operations but spent $210.7 billion, net, on property and equipment, leaving a $42.4 billion outflow. A year earlier, free cash flow was a $14.8 billion inflow. Amazon says it expects AWS to become a bigger free-cash-flow business over time.

Is AWS growing faster than Azure and Google Cloud?

No. In the July-to-September quarter, Google Cloud grew 103% and Microsoft Azure grew 48%, while AWS grew 39%. AWS is still the largest of the three by revenue, at $45.98 billion against about $33.2 billion for Azure and $30.7 billion for Google Cloud. The companies define their cloud units differently.

What is Amazon spending on AI?

Mostly AI data centres and the equipment inside them: buildings, power and accelerator chips, including Nvidia GPUs and Amazon's own Trainium. Amazon's CFO said its capex relates primarily to AWS and AI. Amazon also invests in AI companies directly. Its stake in Anthropic produced $9.5 billion of pre-tax gains in Q3 2025.

What did Andy Jassy say about AI shopping agents?

He said outside AI shopping agents are still not great and not more convenient than shopping with a retailer directly, and that few customers use them yet. Amazon blocked Meta's Muse agent in September. Jassy said Amazon's own Alexa for Shopping, used by more than 400 million customers in the past year, will be the main way to shop Amazon.

Cleus is an uncensored AI that searches the live web, so you can ask about Amazon, AWS or the AI spending race after this article was written.

Sources

• Amazon: Amazon.com Announces Third Quarter Results (Oct 29, 2026)
• SEC: Amazon Q3 2026 earnings release, Form 8-K exhibit 99.1
• SEC: Amazon Q2 2026 earnings release, Form 8-K exhibit 99.1
• SEC: Amazon Q4 2025 earnings release, Form 8-K exhibit 99.1
• Microsoft: FY27 first-quarter earnings release (Oct 28, 2026)
• SEC: Alphabet Q3 2026 earnings release, Form 8-K exhibit 99.1
• Fortune: Amazon CEO says shopping agents like Meta's Muse 'not great'
• Investing.com: Earnings call transcript, Amazon Q3 2026
• The Motley Fool: AWS Jumps 39% as Amazon's Cash Flow Sinks
• INDmoney: Amazon Q3 2026 earnings analysis
• Silicon UK: Amazon raises 2026 capital spending to $220bn (Jul 31, 2026)
• Yahoo Finance: Amazon's AI spending boom is eating into free cash flow (Apr 30, 2026)
• TechTimes: Amazon commits to selling Trainium chips outside AWS