Amazon’s cloud unit AWS grew 39% in the third quarter — its fastest pace in nearly five years — while the company’s AI building spree pushed its trailing free cash flow to negative $42.4 billion. Why it matters: AWS demand is accelerating, not plateauing, and Amazon is spending — and borrowing — at a scale that tells you how long management expects the AI buildout to run.
October 29, 2026
What happened
Amazon reported third-quarter results on Thursday. AWS revenue grew 39% to $46 billion, putting the cloud unit at a $184 billion annualized revenue run rate. CEO Andy Jassy said on the earnings call that he expects AWS growth to top 40% in both 2027 and 2028, and that AWS has a backlog of $578 billion in contracted future revenue — more than double a year earlier.
The headline numbers missed Wall Street’s marks even as the cloud business beat them. Total net sales rose 12% to $201.9 billion, just under the roughly $202.2 billion analysts expected, and earnings came in at $1.89 per share against a $1.97 consensus, as higher interest costs on Amazon’s growing debt ate into profit. Operating income told a stronger story, rising to $28.1 billion from $17.4 billion a year earlier. Shares fell 4% in the regular session and dropped further in after-hours trading.
The AI bill, in plain numbers
The cost side is where the AI story lives. Amazon’s free cash flow over the past 12 months was an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier — a swing the company attributes primarily to its artificial-intelligence investment, including a sharp increase in purchases of property and equipment. Amazon still expects capital spending of about $220 billion this year, and Jassy told investors it will spend “meaningfully more” on capital projects in 2027.
For the fourth quarter, Amazon guided net sales of $240 billion to $247 billion and operating income of $28.5 billion to $33.5 billion.
Why it matters
For subscribers, this is the clearest quarterly snapshot yet of the AI economy’s two ledgers. On one side: real, accelerating revenue — AWS growing 39%, a $578 billion backlog, and guidance for even faster growth two years out. That backlog is contracted demand, not hype. On the other side: negative free cash flow at one of the most cash-generative companies on earth, funded increasingly by debt. Jassy’s own framing was blunt: “There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years,” naming AWS and Amazon’s stores business. Everything AI, tested — the demand is passing the test so far; the financing is the part to watch.
Frequently asked questions
How fast did AWS grow in Q3 2026?
39% year over year, to $46 billion — its fastest growth pace in nearly five years, and a $184 billion annualized run rate.
Why did Amazon’s stock fall if AWS beat expectations?
Total sales and earnings per share both came in just below analyst consensus, and investors are weighing the spending: trailing free cash flow is negative $42.4 billion, driven primarily by AI infrastructure investment.
How much is Amazon spending on AI infrastructure?
Amazon expects about $220 billion in capital spending in 2026 and “meaningfully more” in 2027, according to CEO Andy Jassy on the earnings call.
What did Amazon guide for AWS growth?
Jassy said he expects AWS growth to top 40% in both 2027 and 2028, backed by a $578 billion contracted revenue backlog.
Sources: GeekWire, The Motley Fool, TechCrunch, Amazon Q3 2026 earnings release via GeekWire