In brief
Amazon reported a 12 % year‑on‑year rise in third‑quarter net sales to $201.94 billion, driven largely by a 39.3 % jump in AWS sales. However, net income slipped 2.4 % to $20.69 billion, largely due to a $9.5 billion pretax gain from Anthropic. The company forecasts fourth‑quarter net sales of $240–247 billion and operating income of $28.5–33.5 billion.
Amazon announced that its third‑quarter net sales increased 12 % year‑on‑year to $201.94 billion, while net income fell 2.4 % to $20.69 billion, according to an Xinhua report released on October 29. The company attributed the earnings decline mainly to a $9.5 billion pretax gain from its investment in the artificial‑intelligence firm Anthropic.
Sales growth was heavily weighted toward the company’s cloud‑computing division, Amazon Web Services. AWS recorded net sales of $45.98 billion, up 39.3 % from the same quarter last year. This marks the division’s fastest growth pace in nearly five years and underscores the continued demand for cloud infrastructure across industries. Operating income at AWS jumped 55 % to $17.77 billion from $11.43 billion a year earlier, reflecting both higher adoption rates and improved cost efficiency.
Advertising services also grew in the quarter, representing a 11 % year‑on‑year increase to $19.64 billion. Amazon said the rise stems from higher spend on its commercial marketplace and increased visibility of products on the platform, although the sector remains more volatile than Amazon’s core retail revenues.
Net income revisions are tied to the pretax gain from Anthropic. The $9.5 billion amount was recorded in the third quarter of 2025, and Amazon notes that it has no expectation of a similar gain in the current quarter. Despite the pretax gain’s positive impact on revenue, the accounting treatment effectively reduces presented net earnings for the period, which explains the 2.4 % dip in profit.
Free cash flow for the 12 months ended September 30 turned negative, registering an outflow of $42.4 billion versus an inflow of $14.8 billion a year earlier. The decline is attributed primarily to heavy investment in AI infrastructure, including the procurement of high‑performance computing hardware and data‑center expansion. This pattern signals Amazon’s broader strategy to enhance its AI capabilities, which may influence future profitability and growth prospects.
Looking forward, Amazon projects fourth‑quarter net sales to fall between $240 billion and $247 billion, a 12 %–16 % year‑on‑year increase. Operating income is forecasted to reach a range of $28.5 billion to $33.5 billion, up from $25 billion a year prior. These guidance figures suggest that, even after reconciling the one‑time Anthropic gain, Amazon anticipates substantial margin improvements driven largely by AWS and advertising revenue streams.
From a performance‑metric lens, the company’s gross margin declined modestly from the prior quarter, mainly because of higher cloud compute usage costs. However, the margin expansion seen in AWS offset these pressures, highlighting the sector as a key driver for Amazon’s profitability agenda.
Investors are watching the quarterly free‑cash‑flow trend closely, as it indicates Amazon’s willingness to allocate capital toward innovation and infrastructure. The outflow signals a reinvestment strategy that could pay off in the long run, but also raises questions about the firm’s short‑term liquidity position.
In summary, Amazon’s third‑quarter results illustrate a mixed picture: strong revenue growth concentrated in AWS and advertising, tempered by a net‑income decline stemming from a unique pretax gain and heavy AI‑related capital expenditures. The company’s guidance for the fourth quarter points to continued momentum, yet the evolving investment landscape may affect the pace of future earnings recovery.
