Amazon Q3 2026 Revenue Hits $201.9 Billion as AWS Growth Surges 39.3%

Amazon reported $201.9 billion in revenue for the third quarter of 2026, an increase of 12% from $180.2 billion a year earlier, as its cloud business recorded its fastest growth in nearly five years.

Operating income jumped 61% to $28.1 billion, pushing Amazon’s operating margin to a record 13.9%. However, net income slipped slightly to $20.7 billion from $21.2 billion, partly because last year’s results included a $9.5 billion pre-tax gain from its investment in Anthropic.

AWS revenue jumps 39.3% as AI demand accelerates

Amazon Web Services (AWS) generated $46 billion in third-quarter revenue, representing 39.3% year-over-year growth, up from 36.7% in the previous quarter.

AWS operating income increased 55% to $17.8 billion, compared to $11.4 billion last year. The cloud division now operates at an annualized revenue run rate of approximately $184 billion.

Despite accounting for less than a quarter of Amazon’s total revenue, AWS generated approximately 63% of the company’s operating income.

According to Amazon’s third-quarter earnings report, the company continues to benefit from growing demand for cloud computing and artificial intelligence infrastructure.

Amazon expects AWS revenue growth to exceed 40% in both 2027 and 2028 as businesses increase spending on AI services.

Amazon retail grows while advertising slows

Amazon’s North American business generated $112.9 billion in revenue, up 6% year-over-year, while international revenue increased 5% to $43.1 billion.

Advertising revenue reached $19.6 billion, growing 11% compared to the same period last year. However, this marked a significant slowdown from the 26% growth recorded in the previous quarter.

Amazon plans $220 billion in AI infrastructure spending

Amazon expects capital expenditure to reach approximately $220 billion in 2026 as it expands AI infrastructure, data centers, and cloud computing capacity.

The spending plans exceed those announced by Microsoft and Google, highlighting Amazon’s aggressive approach to expanding AWS.

However, the investments have also increased pressure on cash flow, with free cash flow turning negative.

Amazon shares dropped nearly 7% in after-hours trading as investors reacted to the company’s spending plans despite strong revenue and operating profit growth.

Amazon forecasts up to $247 billion in Q4 revenue

For the fourth quarter of 2026, Amazon expects revenue between $240 billion and $247 billion, representing year-over-year growth of 12% to 16%.

The company also forecasts operating income between $28.5 billion and $33.5 billion.

The outlook points to continued growth across Amazon’s businesses, although its massive AI investments remain a concern for investors.

Meanwhile, Microsoft recently reported record quarterly revenue of $92.3 billion as Azure grew 48%, while XBOX revenue fell 2%, with hardware sales declining 14%.

In other Amazon news, the company recently unveiled five new Alexa devices, including a $500 Echo Show 16.