Two records in one release
Amazon reported third-quarter net sales of $201.9bn on 29 October, up 12% year on year, and operating income of $28.1bn. That works out to a 13.9% operating margin, which the company calls its highest ever. The same release discloses that free cash flow for the trailing twelve months has swung to an outflow of $42.4bn, against an inflow of $14.8bn a year earlier.
Amazon attributes the swing to a $94.8bn year-on-year increase in purchases of property and equipment, net of proceeds from sales and incentives, which it says “primarily reflects investments in artificial intelligence.” The cash flow statement in the same filing puts the quarter’s purchases of property and equipment at $77.3bn, against $35.1bn in the third quarter of 2025.
AWS at a $184bn run rate
AWS segment sales rose 39% year on year to $46.0bn, which Amazon describes as its fastest growth in nearly five years and a $184bn annualised revenue run rate. AWS operating income was $17.8bn, up from $11.4bn a year earlier. North America segment sales grew 6% to $112.9bn and international sales 5% to $43.1bn, so the cloud unit supplied the growth and most of the profit.
“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,” chief executive Andy Jassy said in the release. Those 2027 and 2028 figures are Amazon’s own projection, not a reported result.
The Anthropic gain inside the net income line
Net income fell to $20.7bn, or $1.89 per diluted share, from $21.2bn and $1.95 a year earlier. Amazon says the decrease was driven primarily by $9.5bn of pre-tax gains on its investments in Anthropic that sat in the third quarter of 2025. The year-on-year decline therefore reflects a one-off gain in the comparison quarter rather than a deterioration in trading.
The usage figures Amazon chose to publish
Alongside the accounts, Amazon published a set of its own adoption numbers for its AI services. It says Fortune 500 companies spent nearly seven times more on Amazon Bedrock year on year and that total Bedrock token volume grew nearly seventeen times. For Bedrock AgentCore, it says tens of thousands of customers deployed twice as many agents in the third quarter as in the prior three quarters combined.
Amazon also claims its newly released Strands harness lowers the cost of agent tasks by 32% through greater token efficiency than other harnesses on the same frontier models, while matching or beating their accuracy. That is a vendor measurement with no published methodology attached, and no independent evaluation of it exists yet.
What to watch
Amazon reaffirmed that it expects 2026 cash capital expenditures of approximately $220bn, and Jassy told analysts the company expects to spend meaningfully more in 2027. For the fourth quarter it guided to net sales of $240.0bn to $247.0bn and operating income of $28.5bn to $33.5bn.
The gap to watch is the one between the margin and the cash. Amazon is now earning its best-ever operating margin while paying out more cash for property and equipment than the business generates. Trailing operating cash flow rose 29% to $168.3bn, and the capital bill still turned free cash flow negative by $42.4bn. Whether AWS growth above 40% arrives in 2027, as Amazon projects, decides how long that gap stays open.
