AWS Q3 revenue growth surges 39%, capex stings Amazon's cash flow

Amazon Web Services revenue surged 39% in the third quarter compared to a year ago, but Amazon results fell short of expectations.

AWS reported operating income of $17.8 billion on revenue of $46 billion. That pace puts AWS on a $184 billion annual revenue run rate.

Parent company Amazon delivered net income of $20.7 billion, or $1.89 a share, on revenue of $201.9 billion, up 12% from a year ago. Amazon said the earnings decrease was due to a tough compare due to its investment in Anthropic.

Wall Street was expecting Amazon to report non-GAAP earnings of $1.96 a share on revenue of $202.26 billion.

By the numbers:

• North America e-commerce in the third quarter had operating income of $8.7 billion on revenue of $112.9 billion.
• International had operating income of $1.6 billion on revenue of $43.1 billion.
• Prime Day was pushed into the third quarter and boosted sales.
• AWS Lambda now has an annual revenue run rate of $1 billion.
• Free cash flow was negative $42.4 billion for the trailing 12 months due to investments in AI. A year ago, free cash flow was $14.7 billion.

CEO Andy Jassy said:

"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."

As for the outlook, Amazon projected fourth quarter sales between $240 billion and $247 billion, up 12% to 16%. The company said that it expects 2026 capex to be about $220 billion.