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Index/scorecardupdated Wed Nov 04 2026 08:00:00 GMT+0800 (Philippine Standard Time)

Amazon

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Amazon — Q3 2026 scorecard

Earnings scorecard for Amazon (NASDAQ: AMZN). Q3 2026 reported after the close on 29 Oct 2026.

What happened

Amazon beat on the AWS thesis and missed on what pays for it. AWS grew 39% to $46.0B, the fastest in five years; operating income of $28.1B (a record 13.9% margin) beat the $22.5–26.5B guide (8-K exhibit 99.1). Net sales of $201.9B and EPS of $1.89 missed the Street's $202.2B and $1.96–1.97; the Q4 guide midpoint ($243.5B) sat below $244.2B.

The market priced capital intensity. Q3 capex hit $77.3B against the ~$55B the bull case needed; trailing free cash flow fell to -$42.4B from -$7.6B (Seeking Alpha). Jassy guided AWS at 40%+ through 2028. The stock fell 6.6% after hours to $227.70. Grades: sales inline, AWS bull, operating income bull, EPS bear, capex bear. Scenario: miss or guide cut (capex leg).

What the market is pricing

Going in, the Street had net sales near $202.2B (+12%) and EPS of $1.96–2.03, at the very top of Amazon's own $197–202B guide (MarketBeat). Operating income was guided to $22.5–26.5B; the top of the range had been beaten eight quarters running. AWS was expected at 30–35% after Q2's 37%, with Morningstar's bar "near the high 30s."

Options implied ±7.7%; the last print rose 15.3% (Earnings Watcher). Polymarket priced 60% on a GAAP EPS beat and 41% on 2026 capex above $220B. The average target was about $336. Morgan Stanley made Amazon a top pick at $350 on 19 Oct, modelling 47% AWS growth in 2027 on a 2 million GPU deployment, with $355B of capex as the stated risk; Wells Fargo and Cantor cut to $329 and $310, and Morningstar held $300. The stock had lost 4.6% on 22 Oct with no news, on Mag 7 capex nerves.

Also listen for

  • AWS operating margin. About 39% in Q2; Morgan Stanley's $350 target needs 42% in 2027 while depreciation from $220B of capex pulls the other way.
  • Backlog. $496B at Q2, up from $364B in one quarter; whether the step-up repeats.
  • Free cash flow and Q4 guide. Trailing -$7.6B against +$18.2B a year ago; Q4 2025 was guided to $206–213B.
  • Other income. $53.4B of Anthropic gains in Q2 will distort reported EPS again.

Reaction playbook

  • Clean beat — $270–280. If: AWS ≥ 38%, net sales ≥ $204B, operating income above $26.5B, capex held at ~$220B with a Q4 guide at or above the Street. Narrative: the spending pays for itself; Morgan Stanley's 47% looks reachable.
  • In line — $243–260. If: AWS 33–37%, EPS ~$2.00, operating income in the top half of the range, capex reaffirmed. Narrative: fine quarter, still waiting for the cash.
  • Miss or guide cut — $230, then $225 if the 200-day goes. If: AWS < 33%, capex above $230B, or 2027 framed as another step-up with free cash flow negative. Narrative: AWS decelerates into the heaviest spending year yet; AI capex reprices across the Mag 7.

The medium-term story

Q2 2026 made the AWS acceleration undeniable and the capex bill the story anyway: net sales +20% to $200.6B, AWS +37% to $42.2B, operating income +43% to $27.5B, EPS $5.75 including $53.4B of Anthropic gains (Q2 release). Capex of $54.2B pushed trailing free cash flow to -$7.6B and the 2026 guide rose to ~$220B. Jassy disclosed a $496B backlog; the stock rose 15%.

The bull case: the hyperscaler whose AI spend is most visibly turning into bookings, at roughly 20x trailing earnings. The bear case: capital intensity without a cash-flow floor, Morgan Stanley's own $355B for 2027, and chips being shopped to outside investors. The test is whether AWS can outgrow the depreciation about to hit it.

Track record

  • Q3 2026 (reported 29 Oct 2026): Net sales $201.9B inline · AWS +39% bull · Operating income $28.1B bull · EPS $1.89 bear · 2026 capex row bear (Q3 capex $77.3B, TTM FCF -$42.4B, 2027/2028 framed as 40%+ AWS → implied another step-up). Scenario: Miss or guide cut (capex/FCF leg). Stock -6.6% after hours to $227.70.

Research log

  • 2026-06-14 · economist — Amazon (and Meta) scrapped internal AI-usage leaderboards; AWS and rival clouds launched cost-management services with budgeting tools and automatic model-tier triage. Source: Companies Are Scrambling to Curtail Soaring AI Costs (Economist)
  • 2026-06-23 · economist — Five hyperscalers plan ~$750bn of capex, ~$3trn of global data-centre spend 2026–2030; $85bn of projects cancelled over three years, including small Amazon centres. Source: Americas Data-Centre Backlash Puts the AI Boom at Risk (Economist)
  • 2026-07-06 · economist — Amazon's debt-to-free-cash-flow ratio moved from below the S&P 500 average in 2019 to more than four times it; hyperscaler 2026 capex now ~$800bn. Source: Beware the Top-Heavy Economy (Economist)
  • 2026-07-24 · ingest — Amazon shut its AGI lab in San Francisco; the Nova model family had stalled since December amid leadership departures. A spokesperson denied exiting model training. Source: Why AI Hasnt Increased Unemployment According to Anthropic (AI Daily Brief)
  • 2026-07-30 · thesis — Q2 tape: Amazon lifted capex to ~$220bn and the stock rose 7%; the market funded landlords renting against booked backlog and repriced self-consuming operators. Figures Reddit-sourced, unverified. Source: AI Capex Supercycle
  • 2026-08-11 · economist — Amazon's custom-chip business runs at $25bn annualised revenue, one of the three biggest data-centre chip businesses per Jassy; Anthropic and OpenAI intend to use Trainium. Source: Nvidias Great Silicon Showdown (Economist)
  • 2026-08-16 · economist — Alphabet, Amazon and Microsoft control two-thirds of global cloud; Europe's OVHcloud has about one-hundredth of AWS revenue, so allied-government switching costs stay high. Source: America Inc Has a Tight Grip on Allied Governments (Economist)
  • 2026-09-10 · economist — Iranian drones targeted Amazon's data centres in the UAE and Bahrain soon after the Gulf war broke out; Stargate UAE never stopped building. Source: War Has Not Halted the Gulfs Data-Centre Boom (Economist)
  • 2026-10-24 · last30days — Pre-print sweep (97 items, three Polymarket markets, twelve web sources): AWS growth set as the swing factor with the capex and free-cash-flow line as the bear leg. Source: Yahoo Finance AMZN
  • 2026-10-30 · grade — Q3 2026 graded: AWS +39% to $46.0B and operating income $28.1B bull, EPS $1.89 bear, Q3 capex $77.3B with TTM FCF -$42.4B bear. Scenario: miss or guide cut; stock -6.6% after hours. Source: Amazon investor relations