AWS grew 39% to $46 billion in Q3 — its fastest in nearly five years. Here's what it cost Amazon

Amazon Web Services posted $45.98 billion in third-quarter sales, up from $33.0 billion a year earlier, according to Amazon's Q3 2026 earnings release. Anadolu Agency and Techzine put the growth rate at 39.3% and describe it as AWS's fastest pace in nearly five years, up from 36.7% in the prior quarter.

Why it matters: AWS is the clearest single gauge of whether AI infrastructure spending is turning into revenue. This quarter says yes — demand is accelerating at a $184 billion annual run rate. But the same report shows how much Amazon is spending to keep up, and investors reacted to that bill more than to the growth.

The numbers

*Margin calculated by TechMeasured from Amazon's reported segment sales and operating income. Revenue, income, capex and free cash flow figures are from Amazon's release; the prior-year free cash flow is as reported by Constellation Research ($14.7B) and Techzine ($14.8B).

Two ratios stand out. AWS contributed about 63% of Amazon's operating income while making up less than a quarter of revenue, as Techzine notes. And Amazon's quarterly spending on property and equipment more than doubled year over year, to $77.3 billion — the main reason trailing free cash flow swung to an outflow of $42.4 billion.

What Amazon says the demand looks like

CEO Andy Jassy's statement in the release says "our AWS investment in functionality and infrastructure is working." On the earnings call, according to Constellation Research, Jassy said:

• AWS can grow at more than 40% in each of 2027 and 2028, and could become a $1 trillion revenue business within five to ten years.
• Inference now accounts for well over half of AWS's AI revenue.
• Amazon is "installing an AI accelerator about every 14 seconds."
• About 85% of global IT spending is still on-premises, which Amazon frames as remaining headroom.

Those are company projections, not results. The 40%-plus target for 2027–28 is the number to hold Amazon to.

How it stacks up against Azure and Google Cloud

AWS is still the biggest of the three, but it is not the fastest-growing. Techzine, citing figures compiled by Neowin, lists:

Treat the comparison with care: Techzine points out that Google Cloud's segment includes Google Workspace subscriptions, so it is not a pure infrastructure number, and the three companies define their cloud lines differently. Even so, all three are posting growth rates of roughly 40% or more on bases of $30 billion-plus a quarter, which points to AI infrastructure demand that is broad-based rather than a single-vendor story. AWS's edge is scale and margin. Its rivals are adding revenue at a faster percentage clip from a smaller base.

The market's verdict

Amazon's stock fell nearly 7% after the results, per Techzine, as investors focused on cash flow rather than cloud growth. Consolidated net income slipped to $20.7 billion ($1.89 per diluted share) from $21.2 billion. Techzine attributes the decline mainly to a one-time $9.5 billion gain on Amazon's Anthropic stake in the year-earlier quarter. Constellation Research reports that analysts had expected $1.96 per share on $202.26 billion of revenue.

For Q4, Amazon guided to $240–247 billion in net sales and $28.5–33.5 billion in operating income.

What to watch

• Whether AWS crosses 40% growth. Jassy has set that bar for 2027 and 2028. Q4 will show whether the curve is still bending upward.
• Capex vs. cash flow. With about $220 billion of 2026 capex guided, negative free cash flow is likely to persist. The question is how long investors tolerate it if AWS keeps accelerating.
• Inference mix. If inference keeps growing as a share of AI revenue, that suggests recurring production workloads, not one-off training runs. That is the stickier kind of demand.