Key Highlights

  • Amazon (NASDAQ:AMZN) reported third quarter sales of USD 201.9 billion, up 12 percent, on October 29, 2026, slightly below the roughly USD 202.26 billion expected, with Earnings Per Share of USD 1.89 against USD 1.96 expected.
  • Amazon Web Services Revenue rose 39 percent to USD 46 billion with Operating Income of USD 17.8 billion, an annualized run rate of about USD 184 billion by simple arithmetic.
  • Trailing twelve month free Cash Flow was negative USD 42.4 billion, down from positive USD 14.7 billion a year earlier, as purchases of property and equipment reached USD 94.8 billion.
  • Amazon kept its 2026 Capital spending outlook near USD 220 billion and guided fourth quarter sales to USD 240 billion to USD 247 billion; the stock fell 1.4 percent on October 30.

The Third Quarter Numbers

Net income was USD 20.7 billion, and Amazon cited a tough comparison tied to its Anthropic Investment gain. North America delivered USD 112.9 billion of revenue and USD 8.7 billion of operating income, and International delivered USD 43.1 billion and USD 1.6 billion. AWS operating income of USD 17.8 billion is about 63 percent of the USD 28.1 billion segment total, simple arithmetic on the three published figures. The miss itself was small: about 0.2 percent on sales and about 3.6 percent on earnings per share, simple arithmetic on the published figures. That makes Amazon (NASDAQ:AMZN) a cloud profit story funding a heavy build-out. Fourth quarter sales guidance implies growth of 12 percent to 16 percent.

Why Free Cash Flow Turned Negative

Free cash flow is Operating Cash Flow minus capital spending. Amazon spent USD 94.8 billion on property and equipment over twelve months, mostly for data centers and chips, and expects about USD 220 billion of cash capital spending in 2026. The swing from positive USD 14.7 billion to negative USD 42.4 billion is USD 57.1 billion, simple arithmetic on two company figures. Spending arrives before the revenue it supports, so cash turns negative first. Depreciation then rises and weighs on future profit, which is why investors watch whether AWS growth of 39 percent continues to justify the outlay.

Risks and What to Watch

Alphabet had fallen more than 12 percent on October 29 after reporting higher cash burn, yet Amazon (NASDAQ:AMZN) fell only 1.4 percent, helped by the AWS acceleration. Retail and Advertising growth slowed, and a published analysis of the quarter noted a revenue and earnings miss. Risks are that AI returns lag the spending, that financing needs grow, and that the sell-off in chips on October 30 spreads to the cloud buyers. Management commentary on returns from this capital will matter more than the small quarterly miss, because investors now price Amazon on cloud and AI revenue as well as retail. The next checkpoint is the fourth quarter report and any change to the USD 220 billion capital plan.

Where Things Stand

Amazon burned cash because it is spending ahead of AI demand, with USD 94.8 billion of capital spending over twelve months against operating cash flow that did not keep pace, while AWS grew 39 percent to USD 46 billion. The balance of evidence is mixed: Amazon (NASDAQ:AMZN) has strong cloud growth and a large profit engine, but negative free cash flow of USD 42.4 billion leaves it exposed if AI revenue arrives more slowly than expected.