In brief
Amazon reported third‑quarter 2026 sales of $201.94 billion, up 12 % year‑on‑year, while net income fell 2.4 % to $20.69 billion. Growth was driven largely by Amazon Web Services, which saw a 39.3 % jump in sales and a 55 % rise in operating income. The dip in net income was largely attributed to a $9.5 billion pretax gain on an AI investment. The company plans to see further sales growth in the fourth quarter despite a negative free‑cash‑flow swing.
On October 29, Xinhua reported that Amazon, the U.S. e‑commerce and technology giant, posted third‑quarter 2026 results showing a 12 % rise in net sales to $201.94 billion, while net income fell 2.4 % to $20.69 billion.
Amazon’s sales increase was largely driven by growth in its Amazon Web Services division (AWS). AWS net sales climbed 39.3 % year‑on‑year to $45.98 billion, marking the fastest growth in almost five years. Operating income for the cloud unit surged 55 % to $17.77 billion, up from $11.43 billion a year earlier, according to the company’s quarterly statement.
The company also posted gains in its advertising business. Advertising services net sales were up 11 % year‑on‑year, reaching $19.64 billion. That segment’s growth helped offset pressure on other areas of the business.
Despite revenue growth, Amazon’s net income declined to $20.69 billion from $21.19 billion a year earlier. Diluted earnings per share slipped from $1.95 to $1.89. The company attributed the drop primarily to a huge pretax gain from its investment in artificial‑intelligence firm Anthropic, which accounted for $9.5 billion of the loss in operating profit in the quarter.
Free‑cash‑flow outcomes also reflected a shift in capital allocation. Amazon’s free cash flow turned negative for the twelve months ended September 30, recording an outflow of $42.4 billion versus an inflow of $14.8 billion a year earlier. The change was largely due to increased investment in AI infrastructure, a focus highlighted in the company’s strategy for the period.
Looking ahead, Amazon outlined expectations for the fourth quarter. Management projects net sales between $240 billion and $247 billion, implying year‑on‑year growth of 12 % to 16 %. Operating income is forecast to reach $28.5 billion to $33.5 billion, a rise from $25 billion reported for the same period last year.
Background on Amazon’s Core Segments
Amazon’s business model relies on three intertwined segments: retail e‑commerce, AWS, and advertising. Retail sales account for roughly one‑third of total revenue, while AWS has consistently provided higher margins and fuelled growth momentum. Advertising sales, though smaller, offer high-margin opportunities and benefit from the company’s scale on its e‑commerce platform.
In the last fiscal year, Amazon’s focus on AI technologies has intensified. The company’s partnership with Anthropic, an AI startup, has been a central part of its strategy to compete in the rapidly evolving technology landscape. The organization's investment has produced both a noticeable pretax gain and an increase in infrastructure spending.
Amazon’s cash‑flow profile shifted in the quarter, driven by the company’s intention to invest heavily in AI infrastructure. The company’s free‑cash‑flow loss for the year illustrates how capital expenditures can temporarily outpace cash generation in a growth‑driven firm.
According to Xinhua’s report, the company’s fourth‑quarter outlook reinforces confidence in its core growth drivers while acknowledging the need for capital allocation in advanced technologies. Investors will likely watch for how these investments translate into long‑term earnings momentum.
