Amazon reported third quarter 2026 results characterized by an acceleration in its cloud division and record-breaking profitability, despite missing consensus estimates for total revenue and earnings per share. Operating income reached a record $28.1 billion, yielding the company's highest-ever operating margin of 13.9%, driven by efficiency in fulfillment and high-margin AWS scale. However, aggressive AI infrastructure spending led to a significant free cash flow outflow on a trailing twelve-month basis.
Key Highlights
- AWS net sales surged 39% year-over-year to $46.0 billion, its fastest growth rate in nearly five years, reaching a $184 billion annualized run rate.
- Operating margins expanded to 13.9%, supported by North America segment operating income doubling year-over-year to $8.7 billion.
- Free cash flow shifted to a TTM outflow of $42.4 billion, down from a $14.8 billion inflow a year ago, due to a $94.8 billion increase in property and equipment purchases for AI infrastructure.
- Net income of $20.7 billion ($1.89 per share) was impacted by the cycling of a $9.5 billion pre-tax gain from the Anthropic investment recorded in the prior-year period.