Amazon Q3 2026 Misses Forecasts as AWS Revenue Jumps 39%
Amazon's third quarter sales and EPS missed forecasts, while AWS grew 39% and AI spending drove trailing free cash flow to negative $42.4 billion in 2026.
Summary
Amazon’s third quarter results, released Thursday, October 29, 2026, missed analyst expectations tracked by FactSet. Net sales rose 12% to $201.9 billion, below the $202.2 billion forecast, while fully diluted earnings per share reached $1.89 versus $1.97 expected. Amazon Web Services sales climbed 39% year over year to $45.98 billion, beating the $45.29 billion estimate. AWS operating income increased to $17.8 billion from $11.4 billion in the third quarter of 2025.
Trailing 12 month free cash flow fell to negative $42.4 billion from positive $14.8 billion for the period ended September 30, 2025, alarming investors. Amazon attributed much of its spending to AI investments and reiterated expected 2026 cash capital expenditures of about $220 billion with one fiscal quarter remaining. Fourth quarter net sales are forecast at $240 billion to $247 billion, meaning full year capital spending could nearly equal revenue from the holiday quarter, typically retail’s largest.
Positives
- AWS sales grew 39% year over year to $45.98 billion, exceeding the $45.29 billion analyst estimate.
- AWS operating income reached $17.8 billion, up from $11.4 billion in the third quarter of 2025.
- Amazon net sales increased 12% year over year to $201.9 billion.
- Fourth quarter net sales are forecast between $240 billion and $247 billion during the holiday shopping period.
Risks & concerns
- Amazon’s $201.9 billion in net sales missed the $202.2 billion analyst forecast.
- Fully diluted earnings per share of $1.89 fell short of the $1.97 expected.
- Trailing free cash flow deteriorated to negative $42.4 billion from positive $14.8 billion a year earlier.
- Expected 2026 cash capital expenditures of about $220 billion will nearly match forecast fourth quarter sales.
- Heavy AI investment is consuming substantially more cash than Amazon generates, unsettling investors.