- AWS revenue jumped 39.3% to $46 billion in Q3 2026, but strong cloud growth wasn’t enough to ease investor concerns
- CEO Andy Jassy defended plans to build a trillion-dollar-plus business as capex hit $75.9 billion
- Synergy Research Group noted cloud services spending surged 55% to $168 billion in Q3 as AI continued to reshape the market
Amazon CEO Andy Jassy is driving toward 40+% AWS revenue growth in 2027 and 2028 and $1 trillion in revenue within five to 10 years. But investors are eyeing the speedometer nervously.
It seems $201.9 billion in consolidated Q3 revenue and $46 billion in AWS revenue weren’t enough to overcome cold feet about rising capex costs and returns on investment.
New Street Research’s Dan Salmon explained that while AWS revenue and operating income beat consensus estimates, overall revenue fell short of buyside expectations.
“[Wall] Street was hoping for a Rule of 80 or 40/40 quarter and 39% revenue growth, and 38% margin wasn’t quite there,” he explained.
While 39% revenue growth seems like a lot for any business, most others aren’t dropping nearly $76 billion on capex in a single quarter the way Amazon is.
“We think anxiety over the [Anthropic] annual revenue run-rate is hanging over many AI-related trades at the moment, and that includes its ‘preferred cloud and training partner’ AWS,” Salmon wrote. So despite Amazon’s grand plans to become a trillion-dollar business, “the stock is likely to remain in a holding pattern until the revenue beats get bigger.”
But CEO Andy Jassy defended its strategy on Amazon’s earnings call. The AI opportunity, he said, is too great to miss out on.
“The idea of being able to grow 39% with $184 billion annual run rate and to grow 40% a year on top of that in each of the next two years, and ultimately to end up as a trillion-dollar-plus business – we're going to invest to continue being the leader,” he said. “Would it be more convenient if this type of acceleration and opportunity happened over 25 years and you could spread the CapEx over 25 years? Yeah, it might be more convenient, but that's not the world that we live in, and that's not the opportunity. We can fund this plan.”
Zooming out on the cloud market
New data from Synergy Research Group highlights just how much the cloud market has grown so far in the AI era. Spending on cloud services increased 55% in Q3 to $168 billion, with the overall cloud market having doubled in just eight quarters.
“AI has totally transformed the cloud market in terms of service capabilities, customer demand, and growth opportunities,” Synergy’s Chief Analyst John Dinsdale said. “As the growth rate jumps to well over 50%, the leading cloud providers are benefiting from surging revenues, but they are also facing a much-changed market landscape, with AI labs and neoclouds emerging as both partners and competitors.”
Thus far, Amazon has retained its lead with 26% market share, with Microsoft and Google close behind with 19% and 16%, respectively. However, Oracle, Alibaba, SpaceX/xAI, CoreWeave, Salesforce and Anthropic are gaining ground with between 2% and 4% market share each.
Amazon Q3 2026 by the numbers
- Consolidated Q3 2026 revenue rose 12% year over year to $201.9 billion, with AWS revenue up 39.3% to $46 billion.
- AWS’ annualized revenue run rate hit $184 billion.
- Consolidated profit came in at $20.7 billion, down slightly year on year.
- AWS segment operating income increased year on year from $11.4 billion to $17.8 billion.
- Amazon’s order backlog grew triple digits year on year to $578 billion.
- Capex was $75.9 billion. Amazon still expects to spend a total of around $220 billion in 2026, but teased a "meaningful" increase in 2027.
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