Amazon Operating Margin Hits Record 13.9% as AWS Reaccelerates

The Tip Desk · October 29, 2026 · 3 min read

Third-quarter net sales were $201.9 billion, up 12%, while AWS reached a $184 billion annualized run rate and the company guided fourth-quarter sales to $240.0 billion to $247.0 billion.

Amazon.com, Inc. (AMZN) reported operating income of $28.1 billion for the third quarter ended September 30, 2026, up from $17.4 billion a year earlier, and said the 13.9% operating margin was the company’s highest ever.

Net sales rose 12% to $201.9 billion, slower than the 20% year-over-year increase in the second quarter. Excluding a $0.9 billion unfavorable foreign-exchange impact, growth was 13%. The company said Prime Day moved into the second quarter this year after falling entirely in the third quarter of 2025; excluding that shift, third-quarter year-over-year growth would have been about 400 basis points higher.

AWS was the offset. Segment sales increased 39% to $46.0 billion, accelerating from 37% growth in the second quarter and 28% in the first. AWS operating income was $17.8 billion, and the annualized revenue run rate reached $184 billion. President and CEO Andy Jassy said AWS is projected to grow at rates of over 40% both in 2027 and in 2028.

North America sales increased 6% to $112.9 billion, after 16% growth in the prior quarter. North America operating income was $8.7 billion. International sales rose 5% to $43.1 billion, or 8% excluding foreign-exchange changes, and International operating income was $1.6 billion.

Advertising services revenue was $19.6 billion, up 11% year-over-year, or 12% excluding foreign exchange, after 26% growth excluding FX in the second quarter. The company said third-quarter advertising growth was impacted by timing anomalies primarily related to Prime Day. Online stores sales were $68.5 billion, up 2%. Third-party seller services were $46.5 billion, up 9%. Subscription services were $14.0 billion, up 11%.

Net income decreased to $20.7 billion, or $1.89 a share, from $21.2 billion, or $1.95 a share, a year earlier. The company said the decline was driven primarily by $9.5 billion of pre-tax gains in third quarter 2025 from investments in Anthropic that were not repeated.

Trailing-twelve-month operating cash flow increased 29% to $168.3 billion. Free cash flow swung to an outflow of $42.4 billion from an inflow of $14.8 billion a year earlier, driven by a $94.8 billion year-over-year increase in property and equipment purchases, net of proceeds, which the company said primarily reflects investments in artificial intelligence.

Amazon said it signed new AWS agreements with Meta, NVIDIA, OpenAI, Salesforce, Oracle, Qualcomm, Verizon, and others, and that Fortune 500 companies spent nearly 7 times more year-over-year on Bedrock, with total Bedrock token volume growing nearly 17 times. Lambda topped a $1 billion annualized revenue run rate.

For the fourth quarter of 2026, net sales are expected to be between $240.0 billion and $247.0 billion, or to grow between 12% and 16% compared with fourth quarter 2025, anticipating an unfavorable foreign-exchange impact of about 60 basis points. Operating income is expected to be between $28.5 billion and $33.5 billion, compared with $25.0 billion in fourth quarter 2025. The company said it expects year-over-year advertising revenue to grow in the high teens in the fourth quarter. It continues to expect 2026 cash capital expenditures to be approximately $220 billion.