Amazon's AWS Growth Hits 39% in Q3 as Capex Guide Jolts Stock

Amazon Web Services grew 39% in Q3 2026 to $45.98 billion, its fastest pace in nearly five years and ahead of the $45.29 billion Wall Street expected, CNBC reported. The cloud unit posted operating income of $17.8 billion at a 38.7% margin, and CEO Andy Jassy said AWS is projecting revenue growth 'of more than 40% in both 2027 and 2028.'

The parent-company print was less celebratory. Amazon posted EPS of $1.89 versus the $1.97 analysts expected, and the stock fell more than 7% in after-hours trading. Total Q3 revenue was $201.9 billion, up 12%, with operating income of $28.1 billion up 61% year over year, a 13.9% operating margin that Amazon called its highest ever.

Jassy also disclosed that AWS has a contracted-revenue backlog of $578 billion, 'more than double' a year ago, and said Amazon will spend 'meaningfully more' on capital projects in 2027 than the roughly $220 billion planned for 2026. Third-quarter capital spending on property and equipment hit $77.3 billion, nearly $20 billion above expectations. Trailing twelve-month free cash flow swung to an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier, reflecting the heavy investment in AI infrastructure.

Alongside yesterday's Intel data-center print and the Alphabet selloff, Amazon's report rounds out an AI-infrastructure earnings week where accelerating cloud demand keeps colliding with capex that is now visibly flattening free cash flow.