Amazon reported a 12% increase in third-quarter revenue to $201.9 billion, supported by rapid growth in its cloud computing division and improved operating profitability, according to financial results released Thursday, October 29, 2026.
Revenue came in slightly below analysts’ expectations of approximately $202.1 billion, but operating income rose 61% from a year earlier to $28.1 billion.
The company’s operating margin reached 13.9%, its highest level on record.
Net income declined approximately 2% to $20.7 billion, compared with $21.2 billion in the same quarter of 2025.
The results highlight Amazon’s expanding role in artificial intelligence infrastructure, with Amazon Web Services (AWS) growing substantially faster than the company’s retail operations.
AWS Revenue Surges 39% as AI Demand Expands
Amazon Web Services generated $46 billion in third-quarter revenue, an increase of 39% from a year earlier and above analysts’ expectations of approximately $45.3 billion.
The performance represented AWS’s fastest growth in nearly five years.
AWS operating income increased to $17.8 billion, compared with $11.4 billion a year earlier, accounting for approximately 63% of Amazon’s total quarterly operating income.
The cloud division has become increasingly important to Amazon’s profitability as businesses expand their use of artificial intelligence, data storage and computing infrastructure.
The latest quarterly revenue corresponds to an annualized revenue run rate of approximately $184 billion, although that figure is not a forecast of full-year sales.
Chief Executive Officer Andy Jassy said the company’s investments in AWS infrastructure and functionality were contributing to stronger demand.
Management also projected AWS revenue growth above 40% in both 2027 and 2028, reflecting expectations for continued expansion in cloud and AI services.
Those projections remain subject to market conditions, customer demand and the company’s ability to deploy additional computing capacity.
Operating Income Climbs Despite Slower Retail Growth
Amazon’s North American business generated $112.9 billion in revenue, an increase of 6% from the previous year.
Operating income in the region rose to $8.7 billion, compared with $4.8 billion in the third quarter of 2025.
International revenue increased 5% to $43.1 billion, while operating income advanced to $1.6 billion from $1.2 billion.
The results indicate that Amazon continued to improve profitability across its retail operations despite more moderate revenue growth.
The company attributed part of its retail performance to broader product selection, faster delivery and operational efficiencies.
Amazon also noted that the timing of its Prime Day shopping event affected year-over-year comparisons.
In 2026, Prime Day took place during the second quarter in most major markets, while the event occurred entirely in the third quarter of 2025.
Excluding this calendar shift, Amazon estimated that consolidated third-quarter revenue growth would have been approximately four percentage points higher.
Advertising and Subscription Revenue Continue to Expand
Amazon’s advertising business generated approximately $19.6 billion in quarterly revenue, an increase of 11% from a year earlier.
Subscription services revenue rose 11% to approximately $14 billion.
Both businesses contribute to Amazon’s broader revenue diversification beyond traditional online retail.
Advertising benefits from the company’s digital marketplace and customer purchasing data, while subscription services include Prime memberships and other recurring digital offerings.
Although their growth rates were below that of AWS, these activities remain important to Amazon’s financial performance.
AI Infrastructure Spending Pressures Free Cash Flow
Amazon’s investment requirements continued to increase as the company expanded its cloud computing and artificial intelligence infrastructure.
Over the 12 months ended September 30, purchases of property and equipment, net of proceeds from sales and incentives, reached approximately $210.7 billion, compared with $115.9 billion in the preceding 12-month period.
The increase was driven primarily by spending associated with artificial intelligence.
Operating cash flow rose 29% to $168.3 billion over the same trailing 12-month period.
However, free cash flow deteriorated to an outflow of $42.4 billion, compared with a positive $14.8 billion a year earlier.
The distinction between operating cash flow and free cash flow is significant.
Amazon continued to generate substantial cash from its operations, but its infrastructure investments exceeded that amount.
The company expects cash capital expenditures of approximately $220 billion for the full year of 2026.
