AWS Revenue Grows 39% to $46 Billion as Jassy Predicts Two $1 Trillion Businesses
Amazon's cloud unit posted its fastest growth in nearly five years, but $220 billion in capital spending and a profit miss sent shares down about 6% after hours.
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Amazon Web Services revenue rose 39.3% year over year to $46.0 billion in the third quarter of 2026, the cloud unit's fastest growth in nearly five years, Amazon reported on October 29, 2026. CEO Andy Jassy said AWS and Amazon's stores business could each become a $1 trillion revenue business within five to 10 years. Shares still fell about 6% in after-hours trading after profit missed Wall Street expectations, GeekWire reported.
Image: Illustrative photo of downtown Seattle, home of Amazon. Josh Swift via Unsplash / Wikimedia Commons — CC0 1.0
The quarter in numbers
| Metric | Q3 2026 | Q3 2025 |
|---|---|---|
| AWS revenue | $46.0B (+39%) | $33.0B |
| AWS operating income | $17.8B | $11.4B |
| Amazon net sales | $201.9B (+12%) | $180.2B |
| Amazon operating income | $28.1B | $17.4B |
| Net income | $20.7B ($1.89/share) | $21.2B ($1.95/share) |
| Free cash flow (trailing 12 months) | -$42.4B | +$14.8B |
AWS is now at a $184 billion annualized revenue run rate.
Net income fell even though operating income rose 61%. Amazon said the decline was driven primarily by $9.5 billion in pre-tax gains on its Anthropic investments that it booked in the third quarter of 2025. The year-earlier figure was inflated by those gains.
Why AWS is accelerating
"Our AWS investment in functionality and infrastructure is working," Jassy said in the release. He projected AWS revenue growth of more than 40% in both 2027 and 2028.
On the analyst call, Jassy pointed to a $578 billion backlog of contracted AWS revenue, according to GeekWire. The largest customers reserve capacity in huge blocks, sometimes as much as a gigawatt at a time. Jassy said that gives Amazon "very good visibility" into 2027, 2028 and part of 2029. Backlog is future commitments, not revenue already booked.
Amazon also said Fortune 500 companies are spending nearly seven times more on Bedrock, its AI inference service, than a year ago. Total Bedrock token volume grew nearly 17 times.
Two trillion-dollar businesses
"There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years," Jassy said.
Morgan Stanley analyst Brian Nowak noted on the call that such a long-range projection is "pretty rare" for Jassy. Jassy said businesses are still early in using AI and the cost of running AI models keeps falling. "You can't predict with any certainty five to 10 years from now," he said of AWS, "but it's not a stretch for us to imagine that this could be over a trillion dollar business."
GeekWire noted that in March Jassy told employees AWS could reach at least $600 billion in annual revenue within about a decade, according to Reuters.
The stores business is already larger. GeekWire calculated online and physical store sales at $309 billion over the past 12 months, or about $575 billion including third-party seller services and advertising. It said it had asked Amazon which figures Jassy meant. These projections are aspirations, not formal guidance.
The cost of getting there
Amazon still expects about $220 billion in cash capital expenditures in 2026, mostly for AWS. Jassy said spending would rise "meaningfully more" in 2027 and that Amazon has "a clear line of sight to attractive financial returns."
The bill is visible in the cash flow. Trailing free cash flow swung to an outflow of $42.4 billion. Amazon said that was driven primarily by a $94.8 billion year-over-year rise in property and equipment purchases, mostly for AI. GeekWire reported that Amazon has raised $115 billion in long-term debt this year and that third-quarter interest expense more than tripled, to $1.7 billion.
What to watch
For the fourth quarter, Amazon guided to net sales of $240 billion to $247 billion and operating income of $28.5 billion to $33.5 billion. Key signals:
- Whether AWS growth crosses 40% as projected
- How much capital spending rises in 2027
- Whether free cash flow recovers as new capacity starts earning revenue
More AI infrastructure coverage is in our Artificial Intelligence hub.
How we reported this
We checked every financial figure against Amazon's third-quarter earnings release and used GeekWire for statements from the analyst call. We corrected the draft's explanation of the decline in net income, using Amazon's own explanation. We also cut a claim that the backlog had doubled because neither source supports it.
Published and fact-checked October 29, 2026.
Sources
- Amazon: Amazon.com Announces Third Quarter Results, Oct 29, 2026.
- GeekWire: Andy Jassy's prediction: Amazon could have two $1 trillion businesses within a decade, Oct 29, 2026.
DailyMech used AI tools to help research and draft this article; it was fact-checked by our editors.