Petr Huřťák
5 min read
Cloud computing and online retail behemoth Amazon (NASDAQ:AMZN) met Wall Street’s revenue expectations in Q3 2026, with sales up 12.1% year on year to $201.9 billion. The company expects next quarter’s revenue to be around $243.5 billion, close to analysts’ estimates. Its non-GAAP profit of $1.89 per share was 3.4% below analysts’ consensus estimates.
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Amazon (AMZN) Q3 2026 highlights:
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Revenue $201.9 billion vs S&P analysts’ estimates of $202.3 billion (in line)
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EPS (GAAP) $1.89 vs analyst expectations of $1.96 (3.4% miss)
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Operating margin 13.9%, up from 9.7% in the same quarter last year
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Market capitalization $2.63 trillion
StockStory’s take
Amazon’s third quarter results were shaped by rapid expansion in its cloud business and ongoing momentum in online retail, but a lower-than-expected profit weighed on investor sentiment. Management emphasized that Amazon Web Services (AWS) posted its fastest growth in nearly five years, powered by demand for AI-related infrastructure and a broad set of new customer use cases. CEO Andy Jassy highlighted that AWS “grew 39.3% year-over-year, accelerating for the sixth straight quarter,” and continued investment in custom chips and fulfillment efficiencies helped offset higher transportation costs. However, the company’s GAAP earnings per share came in below Wall Street forecasts, prompting a significant negative market reaction.
Looking forward, Amazon’s guidance is anchored by expectations of continued strength in both AWS and its core retail operations, underpinned by major investments in AI, robotics, and fulfillment. Management pointed to a sizeable AWS backlog and growing customer adoption of new AI services, with Jassy stating, “We believe that AWS can grow north of 40% in each of 2027 and in 2028 and be a trillion-dollar revenue business in the next five to 10 years.” CFO Brian Olsavsky noted that ongoing capital expenditures, particularly in AI and cloud, are expected to drive long-term revenue and free cash flow, though near-term profitability may fluctuate due to higher operating costs and the timing of new product launches.
Key insights from management’s remarks
Amazon’s management attributed Q3 performance to accelerating cloud growth, strong retail execution, and disciplined investment in AI and fulfillment infrastructure.
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AWS growth acceleration: AWS revenue growth accelerated for the sixth consecutive quarter, with management crediting strong demand for both core cloud and AI services. Jassy noted that AWS backlog grew in the triple digits year-over-year, and new AI products like Bedrock and custom chips such as Trainium and Graviton are driving customer adoption and cost efficiencies.
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AI and custom silicon momentum: The company’s investments in custom silicon, particularly Trainium and Graviton chips, are yielding performance and price advantages for AWS customers. Management said customers using custom silicon saved more than $2 billion in Q3 alone, and revenue commitments for these chips increased over 20 times year-over-year.
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Retail and fulfillment leverage: Amazon’s core retail segments benefited from fulfillment improvements and increased delivery speeds, with management citing a fourth consecutive year of lowering cost to serve per unit. The expansion of same-day and ultrafast delivery, along with greater use of robotics in fulfillment centers, was highlighted as key to maintaining market share gains.
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Grocery and pharmacy expansion: Amazon saw rapid growth in fresh groceries, Everyday Essentials, and pharmacy services. Olsavsky stated that Prime members ordering groceries with same-day delivery have tripled year-over-year, and pharmacy users increased over 60% year-over-year, supporting cross-category spend and customer retention.
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Advertising platform transition: The advertising segment experienced slower growth due to timing shifts of Prime Day and changes in search engine marketing. However, management expects growth to return to the high teens, supported by the rollout of the Amazon Ads Agent, which integrates AI-driven campaign management and optimization tools.
