$AMZN · AMAZON COM INC
Amazon reported Q3 2026 results: net sales of $201.9B (+12% YoY), operating income of $28.1B (record 13.9% margin), and diluted EPS of $1.89. AWS grew 39% to $46.0B. Net income declined 2% YoY to $20.7B due to a $9.5B Anthropic gain in the prior-year quarter. Free cash flow swung to -$42.4B TTM as capex surged $94.8B YoY for AI infrastructure.
- AWS segment sales surged 39% YoY to $46.0B, reaching a $184B annualized revenue run rate.
- Total net sales rose 12% YoY to $201.9B; excluding Prime Day timing shift, growth would have been ~400 bps higher.
- Operating income jumped 61% YoY to $28.1B with a record 13.9% operating margin.
- Net income fell 2% YoY to $20.7B ($1.89 diluted EPS vs. $1.95), dragged by a $9.5B Anthropic gain comp in Q3 2025.
- Free cash flow swung to -$42.4B TTM from +$14.8B a year ago, driven by $94.8B higher capex for AI infrastructure.
Extended-hours trading shows AMZN at $229.60, down 5.82% vs the regular close of $243.79. The selloff reflects the free cash flow hemorrhage (-$42.4B TTM) and the net income decline overshadowing the AWS acceleration and record operating margin.
Amazon's record operating margin and AWS acceleration are being overshadowed by a staggering -$42.4B free cash flow burn — the market must now weigh AI capex returns against mounting capital intensity.
AWS's 39% growth at a $184B run rate sets the pace in hyperscale cloud, but the capex intensity mirrors Microsoft and Google's AI infrastructure arms race — all three are burning cash to capture the next wave.
2026 capex guidance of ~$220B continues to consume cash; free cash flow may stay deeply negative. The $9.5B Anthropic gain in Q3 2025 creates a tough comp that masks underlying earnings growth.