Third-quarter sales of $201.9 billion and earnings of $1.89 a share were both slightly below estimates. The midpoints of Amazon's fourth-quarter sales and operating-income ranges also came in under what analysts expected.
Amazon's third quarter had the best profitability in the company's history. Investors traded it as a disappointment.
Net sales rose 12% to $201.94 billion, just under the roughly $202.1 billion analysts expected. Diluted earnings were $1.89 a share, against an estimate of $1.96 compiled by LSEG. Operating income was $28.1 billion, for an operating margin of 13.9%, which the company called its "highest operating margin ever."
AWS
Amazon Web Services was the strongest part of the report. Its revenue grew 39.3% to about $46 billion, and Amazon said the business now has a $184 billion annual run rate. AWS operating income rose about 55% to roughly $17.8 billion.
"Our AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenue growth in Q3 ($184 billion revenue run rate) and projected revenue growth rates of over 40% both in 2027 and in 2028," Jassy, the chief executive, said in the release.
The forecast
Amazon expects fourth-quarter net sales of $240 billion to $247 billion, growth of 12% to 16%, including a currency headwind of about 60 basis points. The $243.5 billion midpoint is below the roughly $244.3 billion analysts expected. It guided to fourth-quarter operating income of $28.5 billion to $33.5 billion, against $25.0 billion a year earlier. The $31 billion midpoint compares with an estimate of about $33 billion.
Amazon expects advertising revenue to grow in the high teens in the fourth quarter. It kept its 2026 cash capital spending plan at about $220 billion.
What the guidance gap means
The fourth-quarter range is wide, $5 billion on operating income, and the top end exceeds the estimate. Amazon's operating-income forecast has come in below consensus for eight straight quarters, Yahoo Finance noted, so a midpoint under estimates is not new.
The more durable concern is cash. Over the past 12 months Amazon's free cash flow was an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier, because spending on property and equipment rose by $94.8 billion. Jassy indicated on the call that 2027 capital spending will be meaningfully higher than this year's.
The reaction
Amazon shares had already fallen 4.25% on Thursday to $243.79, alongside Alphabet, before the report. In extended trading they fell as much as 9%, and they were about 7% lower, near $226.67, by about 4:30 a.m. ET on Friday.
Margin story or cash story?
The margin story: a record operating margin, AWS growth near 40% with management projecting more than 40% for two more years, and a forecast range whose top end clears expectations.
The cash story: revenue and earnings narrowly missed, both forecast midpoints are below estimates, free cash flow has turned sharply negative, and spending is set to rise again next year.
What to watch
Friday's regular-session trading in Amazon, AWS growth and fourth-quarter operating income against the $28.5 billion to $33.5 billion range, the 2027 capital spending figure when Amazon provides one, and advertising growth against the high-teens forecast.