Amazon's cloud grows 39 percent as AI building turns cash negative

What happened

Amazon reported third-quarter net sales of $201.9 billion on Thursday 29 October, 12 percent more than a year earlier, and operating income of $28.1 billion against $17.4 billion. ^{[1, 2]}

Amazon Web Services, the cloud unit, had sales of $46.0 billion, up 39 percent, and operating income of $17.8 billion against $11.4 billion. North America sales were $112.9 billion, up 6 percent, and International sales $43.1 billion, up 5 percent. Prime Day moved into the second quarter this year, and the company said growth would otherwise have been about four percentage points higher. ^[2]

Net income was $20.7 billion, against $21.2 billion a year earlier. The company said the decrease came mainly from $9.5 billion of pre-tax gains on its Anthropic investments in the third quarter of 2025. ^{[2, 4]}

Why it matters

Purchases of property and equipment were $77.3 billion in the quarter, against $35.1 billion a year earlier, according to the cash flow statement. Over twelve months, free cash flow, operating cash less that spending net of sales and incentives, was an outflow of $42.4 billion against an inflow of $14.8 billion. The company said the rise in that spending primarily reflects investments in artificial intelligence. ^{[2, 5]}

What the call said

Chief Executive Andy Jassy said AWS can grow more than 40 percent in each of 2027 and 2028 and become a $1 trillion revenue business in five to ten years, Constellation Research reported. He said 'customers are gobbling it up' almost as fast as AWS installs capacity, and that inference, the running of trained models, is already well over half of AWS's AI revenue. ^{[3, 2]}

Fortune reported that Amazon intends to sell its Trainium AI chips outside AWS in late 2027. Chief Financial Officer Brian Olsavsky said fuel and other transportation costs would be higher in the fourth quarter than in the third, Fortune reported. Advertising revenue grew 12 percent excluding currency moves, which the release ties mainly to Prime Day timing. ^{[4, 2]}

Where the reports differ

Fortune reported quarterly capital spending of $75.9 billion, which by the desk's arithmetic is the statement's purchases net of $1.4 billion of proceeds; the gross figure is $77.3 billion. Constellation Research wrote that Prime Day was pushed into the third quarter, while the release says the event moved into the second quarter for most large countries. ^{[4, 3, 2]}

What settles it next

The company said it expects fourth-quarter net sales of $240.0 billion to $247.0 billion, growth of 12 to 16 percent, and operating income of $28.5 billion to $33.5 billion, against $25.0 billion a year earlier. It said it still expects 2026 cash capital spending of about $220 billion. It called these expectations as of Thursday 29 October and subject to substantial uncertainty. ^[2]

Who it reaches

Amazon (AMZN) is direct: the results are its own filing. NVIDIA (NVDA), Meta Platforms (META) and Oracle (ORCL) are adjacent: the release names each among the companies that signed new AWS agreements since the last report. ^{[1, 2]}