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TL;DR
Amazon reported that AWS revenue rose 39% to $46 billion in the third quarter, its fastest growth rate since late 2021. The company also reported $75.9 billion in quarterly cash capital spending and negative trailing 12-month free cash flow, while CEO Andy Jassy cited a $578 billion AWS order book.
Amazon Web Services revenue grew 39% to $46 billion in the third quarter, the cloud unit’s fastest reported pace since late 2021, as Amazon sharply increased spending on data centers, chips and other equipment. The investment is supporting expanding AI and cloud capacity, but Amazon’s free cash flow turned deeply negative and its shares fell more than 6% in after-hours trading following the results.
AWS operating income increased 55% to $17.8 billion, according to Amazon’s results for the quarter ended in September. The source material says AWS growth accelerated for six consecutive quarters, from 17% in the second quarter of 2025 to 39% in the latest quarter, with those rates excluding currency effects. Amazon CEO Andy Jassy said the AWS order book—contracted future revenue—reached $578 billion, up from $496 billion three months earlier.
Amazon recorded $75.9 billion in cash capital spending during the quarter. Chief financial officer Brian Olsavsky said on the earnings call that the spending primarily related to AWS and AI. Jassy said most of Amazon’s roughly $220 billion 2026 investment plan would go to AWS, and the company expects to spend “meaningfully more” in 2027. Amazon had planned about $200 billion for 2026 in February and raised that outlook in July, citing higher memory prices, according to the source material.
For the 12 months ending in the third quarter, Amazon generated $168.3 billion in operating cash flow and spent $210.7 billion on capital investments, leaving free cash flow at negative $42.4 billion. The comparable figure a year earlier was positive $14.8 billion. The source article estimates quarterly free cash flow at about negative $33.5 billion using its own arithmetic; Amazon’s reported trailing-year figure is the directly stated measure. The article also reports that Amazon’s long-term debt rose from $65.6 billion to $173.1 billion over nine months.
Infographic 01 · The scorecard
Fastest cloud growth in five years, deepest cash gap.
Amazon’s third quarter (July to September 2026), scored against the four numbers from my 28 October preview.
The four numbers from my preview, scored for Amazon
Status chips: ok = healthy, hold = watch, urgent = warning sign. My assessment.
- 1 · Capex planAbout $220B for 2026, unchanged holdRaised from $200B in July, citing memory prices. 2027: “meaningfully more”, no number.
- 2 · Cloud vs. capexAWS +39%, operating income +55% holdGross capex +120% vs. a year earlier ($77.3B vs. $35.1B, my arithmetic). Revenue grows fast; spending faster.
- 3 · Free cash flow + fundingDeeply negative, financed with bonds urgentAbout −$33.5B in the quarter (my arithmetic). $48.1B of new long-term debt in Q3.
- 4 · CapacityCustomers take it as fast as it is installed okBacklog +$82B in one quarter. Big blocks reserved well in advance; visibility into 2027–2028.
What beat
- AWS revenue $45.98B vs. $45.29B expected
- AWS operating income $17.77B vs. $16.97B expected
- Operating margin 13.9%, Amazon’s highest ever
What missed
- Earnings per share $1.89 vs. $1.96 expected
- Advertising $19.64B vs. $20.82B expected
- Q4 revenue guide midpoint $243.5B vs. $244.5B expected
- Shares down more than 6% after hours (CNBC; GeekWire: more than 7%)
Sources: Amazon Q3 2026 release, 29 Oct 2026; Amazon Q3 call, third-party transcript; CNBC, 29 Oct; CNBC, 30 Jul; GeekWire, 29 Oct. Analyst expectations as reported by CNBC (LSEG, StreetAccount). Quarterly free cash flow and capex growth: my arithmetic from Amazon’s cash flow statement. Status chips: Thorsten Meyer.
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AI Capacity Comes With a Cash Cost
The results show the tension facing major cloud providers: customer demand for AI computing is rising, while the facilities and equipment needed to serve it require large payments before all contracted revenue arrives. Amazon’s $578 billion AWS order book points to substantial future commitments, but it does not mean that amount will be collected immediately or that every contract will generate the same margins.
For investors, the issue is whether AWS growth and future cash generation will justify the pace and scale of spending. The after-hours share decline came despite faster cloud growth. The source material says Amazon also missed analysts’ earnings-per-share estimate, reported weaker-than-expected advertising results and gave a holiday-quarter revenue forecast slightly below expectations. Those items, alongside the investment bill, offer context for the market reaction; they do not establish a single cause for it.
For businesses buying cloud services, the build-out may expand the availability of computing capacity, including for AI workloads. But the source material says some large blocks of AI capacity are reserved well in advance and short-term access to older AI chips can carry a premium. Amazon shoppers are affected less directly: the source identifies no specific retail price or service change tied to the spending, though the company’s broader financial performance includes its retail and advertising businesses.
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How AWS Spending Has Accelerated
The third-quarter result extends a run of faster AWS growth reported since the second quarter of 2025. According to the source material, the sequence was 17%, 20%, 24%, 28%, 37% and 39%, excluding currency effects. AWS is a major part of Amazon’s cloud business and supplies computing services to companies and organizations, including those developing and running AI applications.
Amazon says its investment includes data-center buildings, computing equipment and its in-house Trainium AI chips and Graviton processors. Jassy said Amazon was installing an AI accelerator about every 14 seconds. He also said revenue commitments for the company’s chips had increased more than 20-fold in a year. These are statements by Amazon’s CEO, not independently verified measures in the supplied material. Amazon said customers saved more than $2 billion in the quarter by using its chips; that figure is also the company’s own claim.
Building infrastructure rather than relying more heavily on rented capacity is part of Amazon’s stated approach. Jassy argued that renting from specialist cloud providers can reduce operating margins, but the comparison cited in the source is his claim, not an audited industry-wide finding. The spending also creates future expenses: depreciation and amortization rose 25% to $20.9 billion in the quarter as the cost of assets is recognized over time.
“The cash capital spending primarily relates to AWS and AI.”
— Amazon CFO Brian Olsavsky, on the earnings call
Returns and Capacity Remain Unclear
The figures establish that Amazon is investing heavily and that AWS growth and its contracted order book increased; they do not show when each investment will begin producing revenue or what returns it will earn. Amazon’s order book represents contracted future revenue, not cash already received. The source material does not provide a schedule for when the $578 billion will be recognized, nor a breakdown of expected profitability across those commitments.
It is also unclear how much of the spending goes to power infrastructure, memory, buildings or particular types of chips. Amazon cited memory costs and supply volatility as risks, but the supplied material does not quantify their effect on future spending or service prices. Claims about customer savings from Amazon chips and the margin difference between owned and rented capacity come from Jassy or Amazon and are not independently established in the source material.
The source reports that shares fell more than 6% after hours and lists several results that missed expectations, but it does not establish how much each factor contributed to the decline. It also offers no confirmation of changes to retail prices, AWS pricing or customer service levels as a result of the investment program.
Watch Spending and AWS Demand
Investors and cloud customers will be watching Amazon’s next quarterly results for updates on AWS revenue growth, operating income, capital spending and free cash flow. Amazon’s stated plans—about $220 billion in investment for 2026 and meaningfully more in 2027—make those measures central indicators of whether demand is translating into cash generation.
Further updates may clarify how quickly new data-center capacity comes online and whether supply constraints, including memory availability and energy costs, affect the schedule. The source material says Amazon plans to sell Trainium chips outside AWS starting in late 2027, but it does not give further details about the rollout or likely revenue. Until Amazon provides more information, the timing and financial returns of the build-out remain open questions.
Key Questions
How fast did AWS grow in the third quarter?
AWS revenue increased 39% to $46 billion in the quarter ended in September, according to Amazon. The source material describes this as the unit’s fastest growth pace since late 2021.
Amazon shares fell more than 6% in after-hours trading, according to the source material. It points to heavy infrastructure spending, an earnings-per-share result below analysts’ expectations, weaker-than-expected advertising and a slightly softer holiday-quarter revenue forecast. The available information does not quantify the role of each factor.
What does AWS’s $578 billion order book mean?
CEO Andy Jassy said AWS had $578 billion in contracted future revenue, compared with $496 billion three months earlier. The figure reflects commitments expected to be delivered over time; it is not revenue already collected or a guarantee of a particular profit.
How much did Amazon spend on capital investment?
Amazon reported $75.9 billion in cash capital spending in the third quarter. The company expects about $220 billion in investment for 2026 and said it expects to spend meaningfully more in 2027.
What is not yet known about the AI build-out?
The supplied material does not specify when all planned capacity will become available, how much of the spending is allocated to particular infrastructure costs, or what returns the investments will generate. It also does not provide a schedule for converting AWS’s contracted future revenue into cash.
Source: ThorstenMeyerAI.com
