Amazon’s third-quarter report delivered a split verdict: Amazon Q3 earnings showed Amazon Web Services growing at its fastest pace in this stretch, yet revenue landed slightly under Wall Street’s target and free cash flow swung to a loss of more than $33 billion. Shares dropped in after-hours trading on Thursday, October 29. Here is what the numbers say and what investors are watching next.
Amazon Q3 Earnings: The Headline Numbers
According to TradingKey’s report on the results, Amazon posted revenue of $201.94 billion, up 12% from a year earlier. That was about $366 million below the consensus estimate of roughly $202.31 billion, a narrow miss in percentage terms but enough to rattle a market already sensitive to big-tech spending.
GAAP net income came in at $20.69 billion, down 2% year over year, and diluted earnings per share were $1.89, down 3%. The report attributes the decline mainly to a $9.5 billion pre-tax gain on the company’s Anthropic investment that boosted the year-ago quarter. The report also notes that Prime Day moved into the second quarter this year, which affects the comparison.
Consolidated operating income rose 61% to $28.08 billion, for an operating margin of 13.9%, which the report describes as a record.
AWS Growth Accelerates to 39%
The bright spot was the cloud. AWS revenue reached $45.98 billion, up 39.3% from a year ago, compared with roughly 37% in the prior quarter and an expectation near 38%. AWS operating income was $17.77 billion, an operating margin of 38.7%.
For investors who see cloud and AI infrastructure as the engine of Amazon’s valuation, an accelerating AWS is the number that matters most. It suggests demand for computing capacity is still outrunning supply.
Advertising Comes Up Short
Advertising revenue was $19.64 billion, up 11% year over year, but about $1.18 billion below the $20.82 billion consensus. Amazon told investors it expects fourth-quarter advertising growth near 20%, a sharp step up that analysts will be watching closely during the holiday season.
The Cash Flow Problem: Capex Hits $77 Billion in One Quarter
The figure behind the sell-off is free cash flow. Amazon’s operating cash flow was $42.42 billion in the quarter, but cash outflows for property and equipment reached $77.26 billion, leaving third-quarter free cash flow at negative $33.46 billion. On a trailing twelve-month basis, free cash flow was negative $42.36 billion, versus positive $14.79 billion a year earlier.
Amazon maintained its full-year 2026 cash capital expenditure guidance of approximately $220 billion. In plain terms: the company is spending enormous sums on data centers and chips, and the payoff is expected to show up in future AWS revenue rather than today’s cash balance.
Fourth-Quarter Guidance
For the fourth quarter, Amazon guided to revenue of $240 billion to $247 billion, representing 12% to 16% growth, and operating income of $28.5 billion to $33.5 billion.
How the Stock Reacted
Per TradingKey, the stock fell more than 11% at one point in after-hours trading before narrowing the loss to about 5.4%, around $230.64, by the time of publication. After-hours moves can swing widely and often look different once regular trading opens, so treat early readings with caution.
What Investors Should Watch Next
- Capex versus AWS growth: Can 39% cloud growth justify a roughly $220 billion annual spending plan?
- Holiday advertising: The guided jump to about 20% ad growth is a clear test in Q4.
- Cash flow trend: Negative free cash flow across twelve months is unusual for Amazon.
- Broader tech sentiment: Other megacap results this week have also moved shares sharply. See our Q3 earnings scorecard and our Fed decision recap for the wider backdrop.
The Bottom Line
Amazon’s quarter shows a company growing its most profitable business faster while spending at a historic pace. Whether that trade-off looks smart or stretched will depend on how quickly AWS converts capacity into revenue. This is general market information, not investment advice; check each company’s filings and consider speaking with a licensed financial professional before making decisions. Stay tuned to USA One News for follow-up coverage as the market opens.
