THE ESSENTIALS IN 30 SECONDS

  • AWS revenue rose 39% year on year to $46.0 billion in the quarter to September 30, with operating income of $17.8 billion, up from $11.4 billion.
  • Amazon expects about $220 billion in cash capital expenditure in 2026, mostly for AWS, and says it will spend meaningfully more in 2027.
  • Trailing twelve-month free cash flow turned to a $42.4 billion outflow, against a $14.8 billion inflow a year earlier; shares fell about 6% after hours.

Amazon reported third-quarter results on October 29 that put its cloud business at the centre of the story. Amazon Web Services (AWS) grew faster than it has in almost five years, but the cost of the AI build-out is now clearly visible in the company's cash flow.

The numbers

Amazon's net sales reached $201.9 billion in the quarter ended September 30, up 12% from a year earlier. AWS revenue rose 39% to $46.0 billion, which the company says amounts to an annualised run rate of $184 billion. AWS operating income climbed to $17.8 billion from $11.4 billion, and group operating income reached $28.1 billion, a 13.9% margin that Amazon calls its highest ever. Net income slipped slightly to $20.7 billion, because the year-earlier quarter included $9.5 billion in pre-tax gains on Amazon's investment in Anthropic.

For the fourth quarter, Amazon guides to net sales of $240 billion to $247 billion and operating income of $28.5 billion to $33.5 billion.

The cost of AI capacity

Amazon expects cash capital expenditure of roughly $220 billion in 2026, mostly for AWS, and told investors it will spend "meaningfully more" in 2027, TechCrunch reports. Net purchases of property and equipment rose by $94.8 billion over the trailing twelve months, mainly for AI infrastructure, and free cash flow over that period swung to an outflow of $42.4 billion. Shares fell about 6% in after-hours trading.

Chief executive Andy Jassy said AWS can grow by more than 40% in both 2027 and 2028 and repeated his ambition for it to become a trillion-dollar revenue business within five to ten years. He described enterprise AI adoption as still in its very early days.

AI products cited

Amazon says spending by Fortune 500 companies on Bedrock, its service for accessing third-party and in-house models, grew nearly sevenfold year on year, while token volume grew almost seventeenfold. It added models from OpenAI, Anthropic, Moonshot AI and Z.ai, among others, and put Bedrock Managed Agents into public preview. A new tool called TorchNeuron lets existing PyTorch code run on Amazon's Trainium chips without rewriting. These usage figures are company-reported and are not broken out in revenue terms.