AWS revenue grew 39% as Amazon missed Q3 expectations and burned cash on AI

Amazon's cloud business was the standout in a third-quarter earnings report that otherwise fell short of Wall Street's expectations. According to TechCrunch, Amazon missed analyst forecasts for both total revenue and earnings per share on Thursday, while Amazon Web Services beat its revenue target and grew 39% year over year.

The numbers

Net sales rose 12% to $201.9 billion, slightly under the $202.2 billion analysts expected, based on FactSet figures cited by TechCrunch. Fully diluted earnings per share came in at $1.89, below the forecast $1.97.

AWS told a different story. The unit booked $45.98 billion in revenue, ahead of the $45.29 billion analysts anticipated, and its operating income climbed to $17.8 billion from $11.4 billion in the third quarter of 2025. A 39% growth rate paired with a substantially larger operating profit indicates that demand for cloud and AI compute is not only strong but increasingly profitable at scale.

AI spending pushed cash flow deeply negative

The figure TechCrunch singles out as most troubling for investors was free cash flow, which fell to a negative $42.4 billion over the trailing twelve months. That is a sharp reversal from the positive free cash flow of $14.8 billion Amazon recorded in the twelve months ended September 30, 2025.

The company attributed the spending largely to its investments in AI. With one quarter left in its fiscal year, Amazon reiterated that it still expects cash capital expenditures of roughly $220 billion for 2026.

That outlay approaches the revenue Amazon expects to collect in its fourth quarter alone. The company guided to net sales of $240 billion to $247 billion for the current quarter, which the holiday shopping season normally makes its biggest of the year. In other words, Amazon plans to spend almost as much on capital investment, mostly for AI, across the full year as it expects to take in from sales in a single quarter.

Why it matters

AWS is the market's largest cloud platform, which makes its results a bellwether for the sector. A 39% revenue increase at roughly $46 billion per quarter, combined with operating income jumping by more than $6 billion year over year, suggests enterprise demand for cloud and AI infrastructure remains robust. That is a positive read-through for the wider cloud market and for competitors racing to add capacity of their own.

The rest of the report shows the cost of that demand. Amazon is now running deeply negative free cash flow by choice, betting that AI infrastructure built today will be monetized through AWS tomorrow. As TechCrunch notes, the weaker top line, the EPS miss and the cash burn were enough to worry investors, even against a booming cloud unit.

The strategic question going forward is whether AWS growth and margins continue to expand fast enough to justify roughly $220 billion in annual capital spending. If AI demand holds, the cash burn may look like a well-timed land grab. If it softens, Amazon will be carrying an enormous capital bill with its retail business growing at a comparatively modest 12%.