Amazon released its third-quarter earnings report on October 29, 2026, revealing mixed results. While the company's overall revenue and earnings per share fell short of analysts' expectations, its cloud division, Amazon Web Services (AWS), demonstrated remarkable growth. Net sales rose 12% to $201.9 billion, slightly below the anticipated $202.2 billion. Earnings per share came in at $1.89, underperforming versus the expected $1.97. However, AWS sales surged 39% year-over-year, reaching $45.98 billion against expectations of $45.29 billion, with operating income increasing from $11.4 billion in Q3 2025 to $17.8 billion.

Despite the strength in cloud revenues, Amazon’s financial report highlighted significant concerns over cash flow. The company’s free cash flow dropped sharply to a negative $42.4 billion for the trailing twelve months, a drastic turn from a positive $14.8 billion a year earlier. This substantial cash burn was primarily driven by heavy investments in artificial intelligence (AI) infrastructure and other capital expenditures. Amazon anticipates ending 2026 with cash capital expenditures around $220 billion, nearly matching the predicted fourth-quarter sales range of $240 billion to $247 billion, underscoring the scale of its AI-related spending.

CEO Andy Jassy expressed optimism about AWS's future, reiterating ambitions for it to become a trillion-dollar annual revenue business within the next five to ten years. He sees the current AI-driven cloud demand as a rare opportunity justifying Amazon’s massive infrastructure spending. AWS is projected to maintain over 40% revenue growth through 2027 and 2028. However, investors reacted cautiously to the report, with Amazon’s shares declining about 6% in after-hours trading as concerns over cash burn and profitability lingered.

In addition to AWS’s performance, Amazon’s broader media and device businesses showed signs of growth. Prime Video, fueled by hits like "Project Hail Mary," has become a profitable operation with a revenue run rate in the tens of billions of dollars. Meanwhile, Amazon unveiled new hardware devices such as the Alexa Photo Frame and the Echo Time smart clock, enhancing its smart home ecosystem. These diverse efforts illustrate Amazon's strategy to expand its digital footprint while grappling with the financial challenges posed by heavy AI and cloud infrastructure investments.