Amazon beats its own guidance in Q3 2026: AWS accelerates to 39% growth and operating margin hits an all-time high

Amazon reported its third fiscal quarter results on Thursday, October 29, 2026, after the market close: net sales of $201.9 billion (up 12% from $180.2 billion a year earlier) and operating income of $28.1 billion, for an operating margin of 13.9% — the highest in the company's history. The figure that has grabbed investors' attention, though, is Amazon Web Services (AWS): the cloud computing division grew 39% year over year to $46.0 billion, its fastest growth rate in nearly five years. And, unlike what happened in the report this past February, Amazon did not raise its 2026 capital expenditure (capex) guidance, which remains at roughly the $220 billion already announced in July.

Context: the decisive week for "Magnificent Seven" earnings

Amazon's report came at the end of a week packed with Big Tech earnings that the market had been watching nervously for one reason in particular: the pace of AI infrastructure spending. On October 21, Meta Platforms had beaten revenue consensus ($64.6 billion, +26%) but its stock fell around 8% over two sessions after raising its 2026 capex guidance for the third consecutive quarter — as we already covered on this blog. Microsoft and Alphabet published their own results on October 28, the same week the Federal Reserve decided to hold interest rates in the 3.75%-4.00% range (with a split vote on December, also covered on this blog). Amazon closed out the earnings cycle of the Big Tech companies that spend the most on AI capex, with AWS as the missing piece to confirm — or deny — whether AI infrastructure demand remained intact after the credit scare that shook CoreWeave and Asian memory makers in mid-October.

On top of that, AWS itself had posted four consecutive quarters of acceleration: from 20% growth in the third quarter of 2025, to 24% in the fourth, to 28% in the first quarter of 2026, and to 37% in the second — its fastest pace in 18 quarters. The question going into this report was whether that trend could continue, given that year-over-year comparisons become tougher the higher the prior quarter's base gets.

The concrete, verified data: guidance beaten, no capex surprise

The numbers from October 29, disclosed in the earnings release filed with the SEC (Exhibit 99.1), were as follows:

• Net sales: $201.9 billion, up 12% from $180.2 billion in the third quarter of 2025 (up 13% excluding a $0.9 billion unfavorable foreign-exchange impact). Growth was lower than in prior quarters partly because this year's Prime Day was held in the second quarter in most major markets, while in 2025 it fell entirely in the third quarter — a calendar effect, not weaker demand.
• Operating income: $28.1 billion, a 13.9% margin — the highest in the company's history, up from $17.4 billion (and a much lower margin) in the same quarter of 2025. The figure clearly tops the guidance range Amazon had given in July ($22.5-26.5 billion).
• AWS: $46.0 billion, up 39% year over year — its fastest growth in nearly five years, and a further acceleration from 37% the prior quarter.
• North America: $112.9 billion, up 6% year over year.
• International: $43.1 billion, up 5% year over year (8% excluding foreign exchange).
• 2026 capex: Amazon reiterated its roughly $220 billion capital expenditure guidance for the year — without raising it, unlike what Meta did in October or what Amazon itself did back in February.
• Fourth-quarter guidance: net sales of between $240.0 billion and $247.0 billion (year-over-year growth of 12% to 16%, versus $213.4 billion in the fourth quarter of 2025) and operating income of between $28.5 billion and $33.5 billion (versus $25.0 billion a year earlier). Amazon also expects advertising revenue growth "in the high teens" in the fourth quarter.

Here's how AWS's growth rate has evolved over the last five quarters — the series shows this isn't a one-off bounce, but a sustained acceleration:

As the chart shows, the jump from 37% to 39% between the second and third quarters of 2026 extends a streak that has now run for five consecutive quarters without interruption — something AWS hadn't seen since the explosive post-pandemic growth years.

Analysis by sector/asset: winners and losers from this news

Amazon and the rest of the "Magnificent Seven": the most relevant part of this report isn't just that AWS accelerated, but that Amazon didn't use the occasion to raise its 2026 capex — something Meta did in both July and October, and Amazon itself did back in February. That removes, at least for one quarter, the main trigger that has punished large-cap tech stocks in 2026 every time they've reported: not the spending itself, but an upside surprise on top of what was already announced.

AI infrastructure suppliers (chips, memory, data centers): Amazon reiterated in its commentary that AWS capacity demand continues to outpace available supply and that this tightness will persist "well into 2027" — directly positive news for AI memory and semiconductor suppliers (Micron, Nvidia, AMD, SK Hynix, Samsung) that we already covered on this blog following CoreWeave's mid-October credit scare. A hyperscaler showing no sign of slowing its spending is, for this supply chain, better news than an acceleration in Amazon's own revenue alone.

Retail and e-commerce: North America's 6% growth, more modest than AWS's, partly reflects the shift of Prime Day into the second quarter — a reminder that Amazon's year-over-year retail sales comparisons for the rest of the year will be distorted by that calendar shift, something investors in other retail chains should keep in mind when comparing their own fourth-quarter results against Amazon's.

Fixed income and growth-stock valuations: with the 10-year Treasury yield still near 2007 highs (around 5.3%, as we covered on this blog on October 2), the fact that Amazon didn't surprise to the upside with more capex reduces, at least for now, the risk of the market punishing the stock for burning more cash than expected in a still-elevated rate environment — the same mechanism that did punish Meta just days earlier.

Digital advertising: the "high teens" growth guidance for Amazon's advertising business in the fourth quarter is a relevant data point for the rest of the ad-tech sector, which competes with Amazon, Meta and Alphabet for brand ad spending during the holiday season.

What to watch next

• Amazon's fourth-quarter results (expected in early February 2027): this will be the first time Amazon has to confirm it kept 2026 capex surprise-free through year-end, and the first time it gives an official 2027 investment figure — the single data point that has moved the stock most negatively over the past year whenever it surprised to the upside.
• AWS backlog trends: analysts will keep watching whether cloud capacity bookings keep outpacing actually installed capacity, which would confirm the supply-demand tightness Amazon describes.
• The Fed's December 2026 meeting: with the split vote from the October meeting already known, any signal about a further hike or a prolonged pause will affect the valuation of Amazon and other large-cap growth stocks.
• SK Hynix's and Samsung Electronics' third-quarter results: these will confirm whether the AI memory demand underpinning Amazon's "supply-constrained" narrative shows up in the numbers of its Asian suppliers too, following the Kospi volatility episode in mid-October that we already covered on this blog.

Historical parallel: what really moves Amazon's stock isn't AWS growth

Amazon's last four quarters of earnings offer a clear lesson for anyone following this stock: AWS growth alone doesn't explain the stock's reaction. In the third quarter of 2025, with AWS growing "only" 20%, the stock rose 10.9% and hit an all-time high — because there were no capex surprises. In the fourth quarter of 2025, with AWS accelerating to 24% and adjusted earnings per share slightly below expectations, the stock plunged around 8% — not because of AWS growth, which was positive, but because Andy Jassy announced a capex increase to roughly $200 billion, far above what consensus expected. In the first quarter of 2026, with AWS at 28% and no spending surprises, the reaction was modest (around +2%). And in the second quarter, with AWS at 37% and capex already known and confirmed without any surprise, the stock jumped more than 15% in the following session.

The pattern the chart shows is consistent: Amazon's stock has rallied hard the two times capex held no surprises (Q3 2025 and Q2 2026), fell hard the one time capex surprised to the upside with a figure well above expectations (Q4 2025), and reacted tepidly when there was neither a positive nor a negative surprise on that front (Q1 2026). Applying that same logic to the October 29, 2026 report — in which Amazon reaccelerated AWS to 39% without touching its capex guidance — the historical pattern would point toward a favorable reaction, in line with what happened in the second quarter of this year, though the final outcome will also depend on the broader market context in which the news lands, with the Fed and the rest of Big Tech having already published their own results the same week.