Amazon reported third-quarter 2026 revenue of $201.9 billion as core online store sales grew just 2% to $68.5 billion, marking the slowest e-commerce expansion in three years. Capital expenditure reached over $77 billion for the quarter, driving a 12-month free cash outflow of $42.4 billion amidst an aggressive AI data center expansion. Despite AWS cloud sales expanding 39% and backlog reaching $578 billion, Amazon stock fell over 6% in extended trading on investor spending concerns.
Q3 2026 financial results
- ▪Amazon reported Q3 2026 operating income of $17.8 billion, compared to $11.4 billion in Q3 2025
- ▪Amazon reported Q3 2026 net income of $20.7 billion, falling short of analyst estimates of $21.4 billion
- ▪Amazon reported Q3 2026 revenue of $201.9 billion, representing a 12% increase year-over-year but slightly missing analyst expectations
- ▪Amazon advertising revenue grew 11% year-over-year in Q3 2026, down from 26% growth in Q2 2026, representing its slowest growth rate since Amazon began breaking out advertising metrics in 2020
AWS performance and long-term outlook
- ▪Amazon Web Services revenue grew 39% year-over-year in Q3 2026, reaching a $184 billion annualized revenue run-rate
- ▪Amazon CEO Andy Jassy stated that Amazon Web Services' cloud capacity is largely sold out for 2027 and a significant portion of 2028
- ▪Amazon CEO Andy Jassy projected that Amazon Web Services revenue could grow more than 40% annually in 2027 and 2028, aiming to reach $1 trillion in annual revenue within 5 to 10 years
- ▪Amazon CEO Andy Jassy said Amazon Web Services' order backlog reached $578 billion at the end of Q3 2026, up from $496 billion at the end of Q2 2026
Capital expenditure on AI infrastructure
- ▪Amazon recorded a free cash outflow of $42.4 billion over the 12 months ending September 30, 2026, driven by a $94.8 billion increase in property and equipment purchases for AI infrastructure
- ▪Amazon spent more than $77 billion on property and equipment in Q3 2026 to build data centers and expand artificial intelligence capacity
- ▪Amazon CEO Andy Jassy said Amazon maintained its 2026 cash capital expenditure forecast of approximately $220 billion, with the majority dedicated to Amazon Web Services
- ▪Amazon CEO Andy Jassy stated that Amazon expects capital expenditure to increase meaningfully in 2027 above 2026 levels
E-commerce sales slowdown
- ▪Amazon online store sales grew 2% year-over-year to $68.5 billion in Q3 2026, marking the company's slowest e-commerce growth rate since early 2023
- ▪M Science analyst John Tomlinson noted that Amazon shifting Prime Day to June in 2026 from July in prior years contributed to relative weakness in Q3 retail sales
Restrictions on AI shopping bots
- ▪Analysts noted that third-party AI agents could hurt Amazon's digital advertising revenue by enabling consumers to research products and bypass sponsored ads on Amazon's site
- ▪Amazon blocked Meta's Muse AI agent and dozens of third-party shopping bots, including Perplexity, from scraping its webstore without advance authorization
Market reaction to earnings report
- ▪Amazon shares dropped 6.3% in premarket trading on October 30, 2026, dragging down futures for the Nasdaq 100 Index by 2.5% and the S&P 500 Index by 1.0%
- ▪Amazon shares fell more than 6% in extended trading on October 29, 2026, following the release of Amazon's Q3 earnings report
Alexa for Shopping adoption
- ▪Amazon stated that the number of shoppers using Alexa for Shopping's agentic features grew more than eight times since the start of 2026
- ▪Amazon reported that more than 400 million shoppers have used its Alexa for Shopping AI assistant tool, formerly known as Rufus
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