Amazon misses Q3 earnings as AWS beats expectations

Amazon reported third-quarter earnings on Thursday that fell short of analyst expectations for both total revenue and earnings per share. The company’s net sales increased 12% to $201.9 billion, slightly below the $202.2 billion projected by analysts. Fully diluted earnings per share came in at $1.89, compared to the expected $1.97. Despite the overall miss, Amazon Web Services sales reached $45.98 billion, surpassing the analyst expectation of $45.29 billion. CEO Andy Jassy noted that AWS revenue increased 39% from the year-ago quarter, marking a trend of steady growth for the sixth straight quarter.

Amazon attributed its significant spending largely to investments in artificial intelligence. The company’s free cash flow fell to a negative $42.4 billion for the trailing 12 months, down from positive $14.8 billion for the trailing 12 months ended September 30, 2025. Amazon reiterated an expectation to end fiscal year 2026 with cash capital expenditures of about $220 billion. Jassy stated that the majority of this spending is for AWS and that the company expects to spend meaningfully more in 2027. The company forecast fourth-quarter net sales between $240 billion and $247 billion, expecting to spend almost as much on capital expenditures over the full year as it expects to bring in from fourth-quarter sales.

Jassy described the AI boom as a once-in-a-lifetime opportunity that required a big financial commitment now. He stated that AWS installs a new AI accelerator about every 14 seconds and that customers are consuming capacity as fast as it is installed. The CEO characterized AWS Bedrock AI services as the fastest growing multi-billion dollar service in the company’s history. Jassy described AWS as an $184 billion annualized revenue run-rate business with the opportunity to grow north of 40% in each of 2027 and 2028. He forecast that AWS revenue would increase by 40% not just next year but in 2028 as well.

Jassy stated that there has never been a business with a trillion dollars of annual revenue and that what they are building at Amazon is unlike anything ever seen before. He reiterated the ambition for AWS to become a trillion-dollar revenue business during the quarterly earnings call. Amazon shares were down about 6% on Thursday in after-market trading due to investor concerns regarding the scale of the spending.