AWS growth in focus ahead of Amazon Q3

Amazon.com (AMZN) Inc.’s upcoming third-quarter 2026 earnings are expected to be driven by strong performance at Amazon Web Services, with analysts looking for AWS growth to exceed prior forecasts as AI demand strengthens. One projection calls for AWS revenue to rise 40% year-on-year, above a Street expectation of 38%, supported by new capacity, price hikes, ramping AI Lab contracts and growing enterprise inference demand.

Expectations for AWS profitability are also elevated, with margins projected at 39% versus a Wall Street estimate of 34.7%. AWS has a $496 billion contract backlog, reinforcing the view that cloud demand, particularly from AI-related workloads, remains robust.

For the third quarter, one analyst forecast sees Amazon reporting revenue of $202 billion and EBIT of $26.4 billion, versus Street consensuses of $202.2 billion and $26.1 billion. Consensus expects earnings per share of $1.96 for the period.

Looking ahead, revenue guidance is anticipated in a range of $239 billion to $246 billion, with a midpoint of $242.5 billion, and operating profit projected between $29 billion and $34 billion. These expectations factor in accelerating AWS growth as a potential source of profit upside, even as retail operations face cost pressures.

BAC aggregated credit and debit card data showed online spend decelerated 4 percentage points quarter-on-quarter to 9% year-on-year.

Advertising trends were affected by Prime Day’s timing, which temporarily slowed ad growth to 15% in the third quarter, with expectations for acceleration in the fourth quarter. Higher gas prices are viewed as a margin risk for North American retail, underscoring the importance of AWS-driven profit contributions.

Amazon shares trade at $250.40 as of October 26, 2026, at 10:26 a.m. EDT. The next major catalyst for the stock is the third-quarter earnings release scheduled for October 29, 2026, after the market close.

EPS estimates have been raised 4.30% over the past 90 days, signaling firmer expectations heading into the print.

A key risk highlighted is investment intensity, with approximately $220 billion of 2026 capital spending cited as a central concern. The analysis warned that if this level of spending rises without a corresponding acceleration in AWS growth, investors may question returns and cash generation, and free cash flow could turn negative in 2026.

Market reaction is expected to hinge not only on headline beats but also on the combination of AWS growth, AWS margins and capital expenditure discipline. A strong AWS outcome with steady spending could support a move toward $265–$270, while weaker AWS data or higher capex could pressure the stock toward $240–$245.