Amazon misses revenue and earnings forecasts, but cloud unit AWS grows 39%

US technology and retail company Amazon reported its third-quarter financial results on Thursday, October 29. Both total revenue and earnings per share came in below analyst expectations. Investors were also concerned by the company's cash figures, while the clear bright spot was its cloud computing unit, Amazon Web Services (AWS).

Key figures

Net sales rose 12% to $201.9 billion. According to FactSet, analysts had expected $202.2 billion. Fully diluted earnings per share were $1.89, against a forecast of $1.97.

AWS sales reached $45.98 billion, above the expected $45.29 billion. Compared with the same quarter a year earlier, the unit's revenue grew 39%. AWS operating income increased to $17.8 billion, up from $11.4 billion in the third quarter of 2025.

Negative free cash flow

The most worrying number was free cash flow, which was negative $42.4 billion over the trailing 12 months. That means the company spent far more cash than it generated. A year earlier, for the 12 months ended September 30, 2025, free cash flow was positive $14.8 billion. Amazon said the heavy spending was driven largely by its investments in artificial intelligence.

Outlook

Amazon reiterated that it still expects to finish 2026 with cash capital expenditures of about $220 billion. For the fourth quarter, it forecast net sales of $240 billion to $247 billion. That quarter is typically a retailer's biggest because of holiday shopping. As a result, Amazon expects to spend on capital expenditures, mostly for AI, over the full year almost as much as it anticipates earning from sales in the fourth quarter alone.