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# Amazon's Operating Margin Hits 13.9%, Its Highest Ever, As AWS Growth Accelerates To 39.3%
- URL: https://www.bullished.co/amazons-operating-margin-hits-13-9-its-highest-ever-as-aws-growth-accelerates-to-39-3-0c39943f/
- Published: 2026-10-29T21:25:13.000Z
- Updated: 2026-10-29T21:25:13.000Z
- Description: Amazon's cloud unit grew fastest in nearly five years, but a $220 billion spending plan left trailing free cash flow at negative $42.4 billion.
- Author: Matteo Parrino
- Tags: SEC Filings, AMZN, Industry: Consumer Discretionary

[Amazon](https://www.bullished.co/tag/amzn/)'s third-quarter [operating income jumped to $28.1 billion](https://www.sec.gov/Archives/edgar/data/0001018724/000101872426000038/amzn-20261029.htm?ref=bullished.co) from $17.4 billion a year earlier, and its 13.9% operating margin is the highest in the company's history, it said Thursday. AWS, its cloud unit, grew 39.3%, the fastest pace in nearly five years, while AI spending pushed trailing-twelve-month free cash flow to an outflow.

## AWS Carries The Quarter

Net sales rose 12% to [$201.9 billion](https://www.sec.gov/Archives/edgar/data/0001018724/000101872426000038/amzn-20260930xex991.htm?ref=bullished.co), against $180.2 billion a year earlier. Amazon said growth would have been roughly 400 basis points (four percentage points) higher without Prime Day moving into the second quarter for most large countries; in 2025 it fell entirely in the third.

AWS sales reached [$46.0 billion](https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Third-Quarter-Results/default.aspx?ref=bullished.co), with operating income of $17.8 billion versus $11.4 billion a year ago. The unit's annualized revenue run rate is $184 billion. CEO Andy Jassy said the investment "is working," and projected AWS growth rates of over 40% in both 2027 and 2028.

North America operating income was [$8.7 billion](https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Third-Quarter-Results/default.aspx?ref=bullished.co), up from $4.8 billion, on sales up 6% to $112.9 billion. International earned $1.6 billion versus $1.2 billion, on sales up 5% to $43.1 billion.

Net income slipped to $20.7 billion, or $1.89 per diluted share, from $21.2 billion, or $1.95\. Amazon said the prior-year quarter included $9.5 billion of pre-tax gains from its Anthropic investments.

## Cash Flow Turns Negative

Amazon, which runs online and physical stores, the Prime subscription, an advertising business and the AWS cloud, is spending heavily on AI. Trailing-twelve-month operating cash flow rose 29% to $168.3 billion, but purchases of property and equipment, net of proceeds, rose $94.8 billion over the year. Free cash flow was an outflow of $42.4 billion, versus an inflow of $14.8 billion a year earlier.

The balance sheet shows long-term debt of $173.1 billion at September 30, up from $65.6 billion at year-end 2025.

## Fourth-Quarter Guidance

Amazon guided to fourth-quarter net sales of $240.0 billion to $247.0 billion, or growth of 12% to 16%, and operating income of $28.5 billion to $33.5 billion, compared with $25.0 billion in the fourth quarter of 2025\. It still expects 2026 cash capital spending of about $220 billion.

The company also expects advertising revenue to grow in the high teens in the fourth quarter, after 12% growth excluding currency effects in the third, which it said was distorted by Prime Day timing.

Amazon scheduled its earnings call for 5:00 p.m. ET Thursday.

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### Sources

- [8-K Filing — AMAZON COM INC (AMZN)](https://www.sec.gov/Archives/edgar/data/0001018724/000101872426000038/amzn-20261029.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit amzn-20260930xex991.htm — AMAZON COM INC 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0001018724/000101872426000038/amzn-20260930xex991.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit amzn-20260930xex992.htm — AMAZON COM INC 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0001018724/000101872426000038/amzn-20260930xex992.htm?ref=bullished.co) — SEC EDGAR
- [Amazon.com, Inc. - Amazon.com Announces Third Quarter Results](https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Third-Quarter-Results/default.aspx?ref=bullished.co) — ir.aboutamazon.com

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