Amazon Operating Margin Hits Record 13.9% as AWS Reaccelerates

Companies

• AMZN

Article body

Amazon.com, Inc. (AMZN) reported operating income of $28.1 billion for the third quarter ended September 30, 2026, up from $17.4 billion a year earlier, and said the 13.9% operating margin was the company’s highest ever. [1][2]

Net sales rose 12% to $201.9 billion, slower than the 20% year-over-year increase in the second quarter. Excluding a $0.9 billion unfavorable foreign-exchange impact, growth was 13%. The company said Prime Day moved into the second quarter this year after falling entirely in the third quarter of 2025; excluding that shift, third-quarter year-over-year growth would have been about 400 basis points higher. [1][3][4]

AWS was the offset. Segment sales increased 39% to $46.0 billion, accelerating from 37% growth in the second quarter and 28% in the first. AWS operating income was $17.8 billion, and the annualized revenue run rate reached $184 billion. President and CEO Andy Jassy said AWS is projected to grow at rates of over 40% both in 2027 and in 2028. [1][5][2][3][4]

North America sales increased 6% to $112.9 billion, after 16% growth in the prior quarter. North America operating income was $8.7 billion. International sales rose 5% to $43.1 billion, or 8% excluding foreign-exchange changes, and International operating income was $1.6 billion. [1][2][3][4]

Advertising services revenue was $19.6 billion, up 11% year-over-year, or 12% excluding foreign exchange, after 26% growth excluding FX in the second quarter. The company said third-quarter advertising growth was impacted by timing anomalies primarily related to Prime Day. Online stores sales were $68.5 billion, up 2%. Third-party seller services were $46.5 billion, up 9%. Subscription services were $14.0 billion, up 11%. [2][6][3]

Net income decreased to $20.7 billion, or $1.89 a share, from $21.2 billion, or $1.95 a share, a year earlier. The company said the decline was driven primarily by $9.5 billion of pre-tax gains in third quarter 2025 from investments in Anthropic that were not repeated. [1][2]

Trailing-twelve-month operating cash flow increased 29% to $168.3 billion. Free cash flow swung to an outflow of $42.4 billion from an inflow of $14.8 billion a year earlier, driven by a $94.8 billion year-over-year increase in property and equipment purchases, net of proceeds, which the company said primarily reflects investments in artificial intelligence. [5][2]

Amazon said it signed new AWS agreements with Meta, NVIDIA, OpenAI, Salesforce, Oracle, Qualcomm, Verizon, and others, and that Fortune 500 companies spent nearly 7 times more year-over-year on Bedrock, with total Bedrock token volume growing nearly 17 times. Lambda topped a $1 billion annualized revenue run rate. [5][7]

For the fourth quarter of 2026, net sales are expected to be between $240.0 billion and $247.0 billion, or to grow between 12% and 16% compared with fourth quarter 2025, anticipating an unfavorable foreign-exchange impact of about 60 basis points. Operating income is expected to be between $28.5 billion and $33.5 billion, compared with $25.0 billion in fourth quarter 2025. The company said it expects year-over-year advertising revenue to grow in the high teens in the fourth quarter. It continues to expect 2026 cash capital expenditures to be approximately $220 billion. [8][9]

Citations

citations[9]{marker,ticker,item,date,accession,source}:
  1,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  2,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  3,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  4,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  5,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  6,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  7,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  8,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing
  9,AMZN,ex_99_1,2026-10-29,0001018724-26-000038,filing