Amazon Q3 2026 Earnings Summary
On October 29, 2026, Amazon reported its third-quarter earnings, showcasing a record-breaking operating margin despite concerns over capital expenditures (capex) growth. The operating profit reached $28.1 billion, exceeding the company's guidance of $22.5 billion to $26.5 billion, while the operating margin climbed to 13.9%, marking the highest level in Amazon's history.
Key Financial Metrics
- Operating Profit: $28.1 billion
- Operating Margin: 13.9%
- AWS Revenue: $46 billion (39% YoY growth)
- Total Revenue: $201.9 billion
- EPS: $1.89 (slightly below consensus)
- Free Cash Flow: -$42.4 billion
Performance Analysis
While the headline metrics of revenue and earnings per share were disappointing, the core performance indicators showed strength. AWS revenue surged by 39%, contributing significantly to the overall operating profit. However, net profit fell to $20.7 billion, down from $21.2 billion the previous year, largely due to a $9.5 billion gain from an investment in Anthropic in Q3 2025.
Impact of Capital Expenditures
Amazon's capital expenditures in Q3 reached approximately $76 billion, more than double the previous year's figure. This aggressive spending has raised concerns among investors, particularly as trailing 12-month free cash flow dropped to -$42.4 billion. The company's long-term debt also increased significantly, from $65.6 billion at the end of 2025 to $173.1 billion by the end of Q3 2026.
Future Outlook
Looking ahead, Amazon expects Q4 revenue to be between $240 billion and $247 billion, indicating a year-over-year growth of 12% to 16%. Operating profit guidance is set between $28.5 billion and $33.5 billion, which is a positive sign compared to the previous year. Despite the concerns over capex, AWS's strong performance and projected growth provide a foundation for optimism regarding Amazon's future earnings potential.
Conclusion
While the market reacted negatively to Amazon's high capital expenditures and the decline in free cash flow, the robust performance of AWS and the company's strong operating profit suggest that the sell-off may be overdone. The outlook for sustained revenue growth in the cloud segment remains a key driver for Amazon's long-term success.