Amazon says AWS grew 39%, fastest in nearly five years

Amazon said Thursday that sales at Amazon Web Services, its cloud computing unit, rose 39% to $46 billion in the third quarter, which the company called the unit’s fastest growth in nearly five years. AWS is now running at a $184 billion annualized revenue rate, according to Amazon’s earnings release.

Total net sales rose 12% to $201.9 billion for the quarter ended Sept. 30, or 13% excluding currency effects, the release said. Amazon noted that its Prime Day sales event shifted into the second quarter this year in most large countries, and said growth would have been about 4 percentage points higher without that shift. Operating income climbed to $28.1 billion from $17.4 billion a year earlier, for an operating margin of 13.9%, which Amazon called its highest ever.

Net income fell to $20.7 billion, or $1.89 per diluted share, from $21.2 billion, or $1.95, a year earlier. Amazon attributed the decline mainly to $9.5 billion in pretax gains on its Anthropic investments in the year-earlier quarter.

What’s driving it

AWS growth has picked up every quarter for more than a year. Excluding currency effects, the unit grew 17% in the second quarter of 2025, then 20%, 24%, 28%, 37% and now 39%, according to supplemental tables in the release. AWS operating income rose to $17.8 billion from $11.4 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,” Andy Jassy, Amazon’s president and CEO, said in the release.

Amazon pointed to its AI services. It said Fortune 500 companies spent nearly seven times more on Bedrock, its service for running AI models, than a year earlier, and total Bedrock token volume grew nearly 17-fold. It said customers deployed twice as many agents on AgentCore in the third quarter as in the prior three quarters combined.

The retail side also improved. North America operating income rose to $8.7 billion from $4.8 billion, and international operating income rose to $1.6 billion from $1.2 billion.

Why it matters

Our read: Amazon’s quarter shows the same trade its rivals showed this week: faster cloud growth bought with far heavier spending. Amazon’s purchases of property and equipment reached $77.3 billion in the quarter, more than double the $35.1 billion a year earlier, according to its cash flow statement. Over the trailing 12 months, net equipment spending rose by $94.8 billion, which Amazon said primarily reflected AI investments, and free cash flow swung to an outflow of $42.4 billion from an inflow of $14.8 billion. Amazon said it still expects about $220 billion in cash capital expenditures for 2026. Its long-term debt stood at $173.1 billion on Sept. 30, up from $65.6 billion at the end of 2025, the balance sheet shows.

The pattern matches its two largest cloud rivals. Alphabet reported $51.4 billion in quarterly capital spending as Google Cloud revenue rose 103%, as we reported. Microsoft said Azure grew 48%, and CFO Amy Hood put capital expenditures at $45.2 billion including finance leases, as we reported. AWS grew more slowly than either in percentage terms, but from a larger base, and its record margins suggest Amazon’s retail business is helping carry the cost. The open question for all three is how long revenue can keep pace with the buildout. Amazon’s own numbers show operating cash flow up 29% while trailing free cash flow went deeper into the red.

Who has a stake

AI model makers are both customers and partners. The release lists new AWS agreements with Meta, Nvidia, OpenAI, Salesforce and Oracle, among others, and says Bedrock added models from OpenAI and Anthropic. Amazon’s Anthropic stake already shows up in its earnings, as the year-earlier gains show; Anthropic’s own filing is covered here. Communities near data centers are another group: Amazon announced a $1 billion program, Built Together, for U.S. data center communities.

What’s next

For the fourth quarter, Amazon forecast net sales of $240 billion to $247 billion, up 12% to 16%, and operating income of $28.5 billion to $33.5 billion, compared with $25 billion a year earlier. It said it expects advertising revenue to grow in the high teens. The guidance assumes no further acquisitions, restructurings or legal settlements, the release said.

Sources: Amazon.com Inc. third-quarter 2026 earnings release.