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Amazon Q3 Results: AWS Grows 39% but Shares Slide After Hours

Amazon Q3 results: sales rose 12% to $201.9 billion and AWS grew 39%, but free cash flow turned negative as 2026 capex heads to about $220 billion.

Isha Sharma
31 Oct 2026 · 5 min read

Cloud data center server racks, Amazon AWS Q3 results

Amazon Q3 results showed a 12% increase in net sales to $201.9 billion for the quarter ended September. Amazon Web Services (AWS), the cloud division, grew 39%, but the company’s stock dropped significantly after the bell on Thursday.

Net sales grew 13% from $180.2 billion in the previous year when adjusted for a $0.9 billion foreign exchange headwind, the company said in its earnings release filed with the SEC. Operating income came in at $28.1 billion versus $17.4 billion a year earlier.

Net income fell to $20.7 billion, or $1.89 per diluted share, from $21.2 billion, or $1.95, a year earlier. The year-ago period was boosted by $9.5 billion in pre-tax gains related to Amazon’s investment in Anthropic, which were not repeated this quarter.

AWS revenue growth lifts Amazon margins

AWS revenue was $46.0 billion in the quarter, an increase of 39% over last year. Its operating income grew to $17.8 billion from $11.4 billion a year earlier, making it Amazon’s largest source of operating income in the quarter.

According to StockTitan’s analysis of the numbers, the company posted its highest operating margin ever at 13.9%. AWS also grew at its fastest rate in almost five years.

North America sales increased 6% to $112.9 billion, with operating income of $8.7 billion compared with $4.8 billion last year. International sales rose 5% to $43.1 billion, or 8% on a constant currency basis, with operating income of $1.6 billion against $1.2 billion.

“Our AWS investment in functionality and infrastructure is working,” said Andy Jassy, President and CEO of Amazon. He said the cloud division is running at a $184 billion annual revenue rate, and that Amazon projects AWS revenue growth of over 40% in both 2027 and 2028.

Amazon capex weighs on free cash flow

Cash flow shows how heavily the company is investing in artificial intelligence (AI). Free cash flow for the trailing twelve months was an outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier.

Operating cash flow increased 29% to $168.3 billion for the period. But purchases of property and equipment, net of proceeds and incentives, jumped $94.8 billion, primarily due to investments in AI, the company said. Amazon still expects cash capital expenditure of about $220 billion in 2026.

Revenue fell slightly short of the $202.3 billion that analysts had predicted, according to Forbes, which cited CNBC. AWS revenue exceeded expectations of $45.5 billion, while earnings per share of $1.89 fell short of the $1.96 estimate cited by Forbes.

The stock had closed down 4.25% at $243.79 on Thursday ahead of the release. It traded 6% to 11% lower in after-hours trade, depending on the report and timing, before paring some of those declines.

Amazon Q3 results: guidance and the India angle

Amazon guided net sales of $240.0 billion to $247.0 billion for the December quarter, representing 12% to 16% growth. It expects operating income of $28.5 billion to $33.5 billion, versus $25.0 billion in the fourth quarter of 2025.

The results come amid growing scrutiny of big technology companies’ AI spending. Meta’s Q3 results showed negative free cash flow, and Alphabet’s shares dropped about 12.6% on Thursday following its quarterly earnings.

Amazon’s spending cycle is one to watch for Indian companies. The company said it has brought its Alexa+ assistant to India, along with Australia and Japan. Indian technology services companies and data centre developers keenly follow global cloud spending trends.

Amazon also said it is investing more than $1.5 billion to raise the minimum starting pay for full-time US operations employees to $20 an hour.

Jassy struck an ambitious note on scale. “There has never been a trillion dollar revenue business,” he said, adding that Amazon may have two such businesses in the next five to ten years.

Investors will now turn to the holiday quarter to see whether retail profits and AWS growth can offset negative free cash flow as data centre spending remains high through 2026.

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Region: USA
Meta title: Amazon Q3 Results: AWS Grows 39%, Shares Fall After Hours (57 characters)
Meta description: Amazon Q3 results: sales rose 12% to $201.9 billion and AWS grew 39%, but free cash flow turned negative as 2026 capex heads to about $220 billion. (147 characters)
Focus keyword: Amazon Q3 results
Secondary keywords: AWS revenue growth, Amazon capex, Andy Jassy
Slug: amazon-q3-results-aws-growth
Tags: Amazon, Andy Jassy, USA, Quarterly Results, Cloud Computing
Category: News, Business
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Internal links used: Meta Q3 results (/business/meta-q3-results-free-cash-flow/)
Note: Fact & grammar check done — 60 corrections (Phrasly output restored for figures, $ billion style, Indian English spelling, sentence fragments, a misstated sales figure and attribution). Flags: After-hours decline varied by source and time (Forbes ~6%, Yahoo ~10%, StockTitan 11.4%) — stated as a 6%–11% range. 13.9% record margin and ‘fastest growth in nearly five years’ attributed to StockTitan (not confirmed in the SEC exhibit text read). Revenue/AWS estimates via Forbes citing CNBC; $1.96 EPS estimate source unnamed by Forbes. Alphabet 12.6% fall from TradingKey. Friday 30 Oct regular-session move not yet known at time of writing.

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