Amazon’s AWS growth accelerates as AI investment drives record margin and cash-flow split
Amazon reported 39.3% AWS growth and a record 13.9% operating margin, while AI infrastructure spending pushed trailing free cash flow deep into outflow.
Amazon’s third-quarter net sales rose 12% to $201.9 billion, while operating income jumped to $28.1 billion from $17.4 billion a year earlier. The 13.9% operating margin was the company’s highest on record, led by AWS.
AWS sales increased 39% to $46.0 billion, its fastest growth in nearly five years, and AWS operating income reached $17.8 billion from $11.4 billion. Amazon said the segment had an annualized revenue run rate of $184 billion and expected growth of more than 40% in both 2027 and 2028.
Net income fell to $20.7 billion, or $1.89 per diluted share, from $21.2 billion, or $1.95, primarily because the prior-year quarter included $9.5 billion of pre-tax gains on Anthropic investments. Operating cash flow for the trailing twelve months rose 29% to $168.3 billion.
The main balance-sheet and cash-flow trade-off was investment intensity. Trailing free cash flow was an outflow of $42.4 billion, versus an inflow of $14.8 billion a year earlier, as net property-and-equipment purchases increased $94.8 billion, primarily for artificial-intelligence infrastructure.
AWS sales
$46.0B
↑ +39% y/y
Operating income
$28.1B
↑ +61% y/y
TTM operating cash flow
$168.3B
↑ +29% y/y
TTM free cash flow
-$42.4B
↓ from +$14.8B
Sources
Quarterly revenue, Amazon
Margins by quarter
Twelve quarters of figures
| Quarter | Q3 '23 | Q4 '23 | Q1 '24 | Q2 '24 | Q3 '24 | Q4 '24 | Q1 '25 | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $143.1B | $170.0B | $143.3B | $148.0B | $158.9B | $187.8B | $155.7B | $167.7B | $180.2B | $213.4B | $181.5B | $200.6B |
| Revenue growth | 12.6% | 13.9% | 12.5% | 10.1% | 11.0% | 10.5% | 8.6% | 13.3% | 13.4% | 13.6% | 16.6% | 19.6% |
| Gross margin | 47.6% | 45.5% | 49.3% | 50.1% | 49.0% | 47.3% | 50.6% | 51.8% | 50.8% | 48.5% | 51.8% | 52.3% |
| Operating margin | 7.8% | 7.8% | 10.7% | 9.9% | 11.0% | 11.3% | 11.8% | 11.4% | 9.7% | 11.7% | 13.1% | 13.7% |
| Net income | $9.9B | $10.6B | $10.4B | $13.5B | $15.3B | $20.0B | $17.1B | $18.2B | $21.2B | $21.2B | $30.3B | $62.6B |
| Diluted EPS | $0.94 | $1.01 | $0.98 | $1.26 | $1.43 | $1.86 | $1.59 | $1.68 | $1.95 | $1.95 | $2.78 | $5.75 |
| Cash from operations | $21.2B | $42.5B | $19.0B | $25.3B | $26.0B | $45.6B | $17.0B | $32.5B | $35.5B | $54.5B | $26.0B | $45.4B |
| Capital expenditure | $12.5B | $14.6B | $14.9B | $17.6B | $22.6B | $27.8B | $25.0B | $32.2B | $35.1B | $39.5B | $44.2B | $54.2B |
| Free cash flow | $8.7B | $27.9B | $4.1B | $7.7B | $3.4B | $17.8B | −$8.0B | $332M | $430M | $14.9B | −$18.2B | −$8.8B |
| Dividends and buybacks | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M | $0.0M |
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