third quarter 2026
Filed Oct 29, 2026Operating income was $28.1 billion and operating margin was 13.9%—Amazon’s highest operating margin ever
Third-quarter net sales increased 12% to $201.9 billion, AWS net sales increased 39% to $46.0 billion, and operating income increased to $28.1 billion from $17.4 billion. Net income decreased to $20.7 billion because third quarter 2025 included $9.5 billion of pre-tax gains from investments in Anthropic, while trailing-twelve-month free cash flow moved to an outflow of $42.4 billion amid higher artificial-intelligence investment.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total net salesGAAP | $201.9B | – | 12% |
| Total net sales growth, excluding F/Xother | 13% | – | – |
| Net product salesGAAP | $75.30B | – | – |
| Net service salesGAAP | $126.6B | – | – |
| Operating incomeGAAP | $28.08B | – | 61% |
| Operating marginGAAP | 13.9% | – | – |
| Cost of salesGAAP | $94.57B | – | – |
| Fulfillment expenseGAAP | $30.00B | – | – |
| Technology and infrastructure expenseGAAP | $34.81B | – | – |
| Sales and marketing expenseGAAP | $11.65B | – | – |
| General and administrative expenseGAAP | $2.70B | – | – |
| Other operating expense (income), netGAAP | $134M | – | – |
| Total operating expensesGAAP | $173.9B | – | – |
| Interest incomeGAAP | $1.19B | – | – |
| Interest expenseGAAP | −$1.69B | – | – |
| Other income (expense), netGAAP | −$703M | – | – |
| Total non-operating income (expense)GAAP | −$1.21B | – | – |
| Income before income taxesGAAP | $26.87B | – | – |
| Provision for income taxesGAAP | −$6.18B | – | – |
| Equity-method investment activity, net of taxGAAP | −$4M | – | – |
| Net incomeGAAP | $20.68B | – | (2)% |
| Basic earnings per shareGAAP | $1.92 | – | – |
| Diluted earnings per shareGAAP | $1.89 | – | (3)% |
| Operating cash flow, trailing twelve monthsGAAP | $168.3B | – | 29% |
| Net cash provided by operating activitiesGAAP | $42.42B | – | – |
| Purchases of property and equipment, net of proceeds from sales and incentives, trailing twelve monthsother | $210.7B | – | 82% |
| Free cash flow, trailing twelve monthsother | −$42.36B | – | (386)% |
| Online stores net salesGAAP | $68.47B | – | 2% |
| Physical stores net salesGAAP | $5.71B | – | 2% |
| Third-party seller services net salesGAAP | $46.49B | – | 9% |
| Advertising services net salesGAAP | $19.64B | – | 11% |
| Subscription services net salesGAAP | $14.01B | – | 11% |
| AWS net salesGAAP | $45.98B | – | 39% |
| Other net salesGAAP | $1.65B | – | 16% |
| WW shipping costsGAAP | $28.30B | – | 11% |
| WW paid units growthother | 12% | – | 12% |
| WW seller unit mixother | 61% | – | – |
| Employeesother | 1,638,000 | – | 4% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| North AmericaPrime Day occurred in Q2 for most large countries in 2026, versus entirely in Q3 in 2025. | $112.9B | – | 6% |
| InternationalNet sales increased 8% excluding changes in foreign exchange rates. | $43.11B | – | 5% |
| AWSAWS investment in functionality and infrastructure, new AWS agreements, and continued rapid growth for Amazon Bedrock. | $45.98B | – | 39% |
Fourth Quarter 2026 outlook
- Revenuebetween $240.0 billion and $247.0 billion, or to grow between 12% and 16% compared with fourth quarter 2025
- NoteOperating income is expected to be between $28.5 billion and $33.5 billion, compared with $25.0 billion in fourth quarter 2025.
- NoteThis guidance anticipates an unfavorable impact of approximately 60 basis points from foreign exchange rates.
- NoteWe expect year-over-year advertising revenue to grow in the high teens in fourth quarter 2026.
- NoteWe continue to expect 2026 cash capital expenditures to be approximately $220 billion.
What drove it
- AWS net sales increased 39% year-over-year to $46.0 billion, and AWS segment operating income was $17.8 billion compared with $11.4 billion in third quarter 2025.
- North America segment operating income was $8.7 billion, compared with $4.8 billion in third quarter 2025.
- International segment operating income was $1.6 billion, compared with $1.2 billion in third quarter 2025.
- Prime Day timing shifted to Q2 for most large countries in 2026. The company stated that, excluding this shift, third-quarter year-over-year growth would have been approximately 400 basis points higher.
- Amazon stated that it delivered its fastest Q3 speeds ever for Prime members, with more than 1.5 billion items arriving same-day or overnight in the quarter.
Concerns
- Free cash flow was an outflow of $42.4 billion for the trailing twelve months, driven primarily by a year-over-year increase of $94.8 billion in purchases of property and equipment, net of proceeds from sales and incentives.
- Net income decreased to $20.7 billion from $21.2 billion, primarily because third quarter 2025 included pre-tax gains of $9.5 billion from investments in Anthropic.
- Fourth-quarter guidance anticipates an unfavorable impact of approximately 60 basis points from foreign exchange rates.
- The guidance cites uncertainty from foreign exchange rates, energy prices, global economic and geopolitical conditions, tariff and trade policies, memory-chip supply volatility, and customer demand and spending.
What to watch
- Fourth-quarter net sales guidance of between $240.0 billion and $247.0 billion and operating income guidance of between $28.5 billion and $33.5 billion.
- The expected high-teens year-over-year growth in advertising revenue in fourth quarter 2026.
- 2026 cash capital expenditures of approximately $220 billion.
- AWS growth rates, following 39% year-over-year net-sales growth in the third quarter and management's statement of projected revenue growth rates of over 40% in both 2027 and 2028.
- The trajectory of trailing-twelve-month free cash flow following the $(42,357) million outflow.
Balance sheet and cash flow
- Cash and cash equivalents were $55,783 million at September 30, 2026, compared with $86,810 million at December 31, 2025.
- Marketable securities were $58,443 million at September 30, 2026, compared with $36,219 million at December 31, 2025.
- Long-term debt was $173,125 million at September 30, 2026, compared with $65,648 million at December 31, 2025.
- Net cash provided by operating activities was $42,422 million for the three months ended September 30, 2026, compared with $35,525 million in the prior-year quarter.
- Purchases of property and equipment were $(77,259) million for the three months ended September 30, 2026, compared with $(35,095) million in the prior-year quarter.
- Proceeds from long-term debt were $48,102 million for the three months ended September 30, 2026, compared with — in the prior-year quarter.
Analysis
Amazon reported third-quarter net sales of $201,944 million, up 12% from $180,169 million. Net sales growth was 13% excluding foreign exchange. The company said Prime Day timing shifted to Q2 for most large countries in 2026, versus entirely in Q3 in 2025, and that excluding this shift third-quarter year-over-year growth would have been approximately 400 basis points higher. Online stores net sales increased 2%, while third-party seller services increased 9%, advertising services increased 11%, and subscription services increased 11%.
AWS was the principal growth and profit contributor. AWS net sales rose 39% to $45,984 million and AWS operating income rose to $17,773 million from $11,434 million. AWS represented 23% of consolidated net-sales mix, compared with 18% in the prior-year quarter. North America sales increased 6% to $112,852 million and segment operating income increased to $8,723 million from $4,789 million. International sales increased 5% to $43,108 million, or 8% excluding foreign exchange, and segment operating income increased to $1,580 million from $1,199 million.
Profitability strengthened materially. Operating income increased 61% to $28,076 million, and operating margin reached 13.9%, which the company described as its highest ever. Technology and infrastructure expense increased to $34,814 million from $28,962 million, while fulfillment expense increased to $29,997 million from $27,679 million. Net income declined to $20,685 million and diluted EPS declined to $1.89 because third-quarter 2025 non-operating income included $9.5 billion of pre-tax gains from investments in Anthropic.
Cash generation remained positive at the operating level but investment intensity expanded sharply. Trailing-twelve-month operating cash flow increased 29% to $168,300 million. Purchases of property and equipment, net of proceeds from sales and incentives, increased 82% to $210,657 million on a trailing-twelve-month basis, and free cash flow was $(42,357) million compared with $14,788 million in the prior-year period. Amazon attributed the increase primarily to investments in artificial intelligence and continues to expect 2026 cash capital expenditures of approximately $220 billion.
For the fourth quarter, Amazon expects net sales between $240.0 billion and $247.0 billion, growth of 12% to 16%, and operating income between $28.5 billion and $33.5 billion. The outlook incorporates an approximately 60-basis-point unfavorable foreign-exchange impact. Management expects advertising revenue to grow in the high teens year-over-year, following third-quarter advertising growth of 12% excluding foreign exchange that it said was affected by Prime Day timing anomalies and other timing factors.
Management, verbatim
Our AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenue growth in Q3 ($184 billion revenue run rate) and projected revenue growth rates of over 40% both in 2027 and in 2028.
Andy Jassy, President and CEO, Amazon
Our broader selection and speedier delivery are helping us capture more retail market segment share with improving margins, and our newer businesses, ranging from Grocery to Pharmacy to Amazon Leo to Zoox are progressing encouragingly.
Andy Jassy, President and CEO, Amazon
There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years.
Andy Jassy, President and CEO, Amazon
Not in the filing
stated, not guessed- Gross profit and gross margin were not reported.
- Non-GAAP revenue, operating income, net income, and EPS were not reported.
- A quarterly tax rate was not reported.
- Share repurchases and dividends were not reported.
- Prior-quarter comparative figures were not reported for most consolidated statement-of-operations line items.
- Prior outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- A fourth-quarter gross-margin, operating-expense, and tax-rate outlook was not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.