Amazon drops more than 7% after hours as Q3 capex hits $77.3B despite AWS growing 39%
AWS revenue of $46.0 billion beat estimates and operating income jumped, but heavy AI spending turned trailing free cash flow to a $42.4 billion outflow and the Q4 sales guide's midpoint trailed forecasts.
Amazon (AMZN) reported third-quarter results after Thursday’s close. Cloud growth beat expectations, but investors focused on how much it is spending.
| Item | Q3 2026 | Year ago |
|---|---|---|
| Net sales | $201.9B (+12%) | $180.2B |
| AWS sales | $46.0B (+39%) | $33.0B |
| Operating income | $28.1B | $17.4B |
| Diluted EPS (GAAP) | $1.89 | $1.95 |
| Capital spending (purchases of property and equipment) | $77.3B | $35.1B |
AWS beat the $45.61 billion LSEG estimate. Amazon said Prime Day’s move into the second quarter cut third-quarter sales growth by about 4 percentage points, and that last year’s EPS included $9.5 billion of pre-tax gains on its Anthropic stake. Trailing twelve-month free cash flow swung to an outflow of $42.4 billion from a $14.8 billion inflow, mainly because of AI investment. The company still expects about $220 billion of cash capex in 2026.
Guidance: fourth-quarter net sales of $240.0 billion to $247.0 billion; the $243.5 billion midpoint is below the $244.51 billion LSEG estimate (Reuters). Operating income is guided to $28.5 billion to $33.5 billion. CEO Andy Jassy said he expects AWS revenue to grow more than 40% in both 2027 and 2028.
Why it matters: coming a day after Alphabet’s cash burn was punished, Amazon is the second big AI spender whose free cash flow has turned negative, which keeps the market’s capex-versus-cash-flow test in focus.
Market reaction: shares closed the regular session at $243.79 (-4.25%) and fell more than 7% in extended trading (Reuters).
WMR data: Amazon was already 15.1% below its 52-week high before the report. Follow it on Amazon.
Next: Friday’s regular-session close and management’s comments on 2027 capital spending.
→ Alphabet's 12.6% Plunge Pulls the Nasdaq Down 1.38% as AI Spending Fears Return
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