The setup
Amazon reported its third quarter of 2026 on : net sales of $201.94B, up 12%, operating income of $28.08B, up 61%, and an operating margin of 13.9%, which the release calls "Amazon's highest operating margin ever." AWS revenue grew 39% to $45.98B, and AWS's customer commitments not yet recognized reached $578B. Andy Jassy opened with the growth path: "projected revenue growth rates of over 40% both in 2027 and in 2028." Decode: that is a forecast, not a run rate, and the filing tells you what it rests on. Two customers signed most of the commitments that make it possible, and Amazon is a shareholder in both.
That is our read of the quarter. Amazon now finances the demand it sells to. In nine months it put $50.0B into OpenAI's Series C preferred and $10.0B into Anthropic preferred, and it opened a $20.0B facility that Anthropic can draw as AWS delivers compute. In the same nine months the two labs added more than $200B of commitments to AWS's book: OpenAI expanded its arrangement by $100.0B over 8.0 years, and Anthropic by more than $100.0B over 10.0 years. Amazon paid for its side with $115.10B of new long-term debt. Its lab book carried $288.7B at , 47.05% of stockholders' equity. This is the circularity loop at hyperscaler scale, and the cash line shows what it costs: purchases of property and equipment were $77.26B in the quarter, 182.12% of operating cash flow, and trailing free cash flow was −$42.36B.
Our call: Amazon's 2026 cash capital expenditures land above the "approximately $220 billion" it reaffirmed, which we will know when it reports the December quarter in early . Nine months of cash capex were $172.19B, so the guide leaves $47.81B for the fourth quarter, 36.99% below the $75.88B spent in the third. We are wrong if December-quarter cash capex is $47.81B or less, which would mean the September quarter was a lump, not a level.
The market took it quietly. AMZN traded at $238.22 at 11:22 a.m. PT on , down 2.28% from the $243.79 close the day before (Robinhood quote, market data). The headline gave the tape a reason to like it: AWS's fastest growth in nearly five years, the best margin in the company's history, a fourth-quarter operating-income guide of $28.5B to $33.5B against $24.98B a year ago. The filing gave it reasons to wait. The backlog added less than it did in June, the purchase commitments nearly doubled, and the funding came from bondholders.
The numbers
| $ millions | Q3 2025 | Q2 2026 | Q3 2026 | Y/Y | Note |
|---|---|---|---|---|---|
| Net sales | 180,169 | 200,606 | 201,944 | +12% | +13% ex-F/X; Prime Day moved to Q2 |
| North America sales | 106,267 | 116,177 | 112,852 | +6% | operating margin 7.7% |
| International sales | 40,896 | 42,197 | 43,108 | +5% | +8% ex-F/X; margin 3.7% |
| AWS sales | 33,006 | 42,232 | 45,984 | +39% | fastest in nearly five years |
| AWS operating income | 11,434 | 16,621 | 17,773 | +55% | margin 38.7% (39.4% in Q2) |
| Advertising services | 17,703 | 19,809 | 19,637 | +11% | +12% ex-F/X; +26% in Q2 |
| Operating income | 17,422 | 27,461 | 28,076 | +61% | 13.9% margin, a record |
| Other income (expense), net | 10,186 | — | (703) | no Anthropic markup this quarter | |
| Net income | 21,187 | 62,647 | 20,685 | (2)% | $1.89 per diluted share |
| Operating cash flow | 35,525 | 45,387 | 42,422 | +19% | TTM 168,300 (+29%) |
| Purchases of property and equipment | 35,095 | 54,208 | 77,259 | +120% | 182.12% of operating cash flow |
| Free cash flow, TTM | 14,788 | (7,604) | (42,357) | company definition | |
| Customer commitments not yet recognized ($B) | 200 | 496 | 578 | +189% | +$82B on the quarter |
| Long-term debt | 50,742 | 128,894 | 173,125 | +241% | face value 180,887 |
All figures are from the Form 8-K Exhibit 99.1 filed and the Form 10-Q filed , with earlier filings listed in the Sources ledger. Quarterly capex, operating cash flow and depreciation for the fourth quarter of 2025 and for each 2026 quarter are derived from year-to-date values in SEC XBRL companyfacts, and the page says so where it uses one.
Two things in the table need reading before the argument. First, net income fell 2% while operating income rose 61%, and the gap is entirely below the operating line. A year ago, other income carried $10.19B, mostly from Anthropic. This quarter it carried −$703M. The release says so directly: the decrease "is driven primarily by pre-tax gains of $9.5 billion in third quarter 2025 included in non-operating income (expense) from our investments in Anthropic." Decode: this was the first quarter in a year in which the Anthropic position did not run through earnings. It still moved. The notes rose $48.3B, and that gain went to other comprehensive income, which is why comprehensive income was $56.68B against net income of $20.69B.
Second, the 12% headline growth is understated by the calendar. The release: "Prime Day timing shifted this year, with the event occurring in Q2 for most large countries. In 2025, Prime Day occurred entirely in Q3. Excluding this shift, third quarter year-over-year growth would have been approximately 400 basis points higher." Read the two quarters together and the shift washes out: June plus September net sales were $402.55B against $347.87B a year earlier, up 15.72%. North America over the same two quarters grew 11.00%, and advertising 18.11%. The stores did not slow. The holiday moved.
The rest of this dive is for paid subscribers.
The headline numbers are above. The 12 sections below carry the mechanism, the lab book, the funding stack, the valuation work, and the dated tests that decide it.
- Seven quarters: the level before the delta
- AWS: the growth held, the margin blinked
- The backlog slowed; the commitments doubled
- The stores paid for the quarter
- The lab book: one company, two prices
- Who pays for it
- Connecting the dots
- The guide and the December bar
- Valuation
- The strongest case against this read
- What we'd watch
- Bottom line
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