Key takeaways
- Net sales: $180.2B, +13% YoY (vs. ~$177.8B expected).
- EPS (diluted): $1.95 (vs. ~$1.56–1.58 expected).
- Operating income: $17.4B including special charges; ~$21.7B on an adjusted basis (FTC settlement ~$2.5B; severance ~$1.8B).
- Net income: $21.2B, aided by non-operating gains (incl. Anthropic mark-to-market).
- AWS: $33B revenue, +20% YoY — best growth since 2022.
- Advertising: $17.7B, +24% YoY, above consensus.
- Q4 guide: revenue $206–213B; operating income $21–26B.
What drove the beat
Two high-margin engines did the heavy lifting. AWS delivered a clean acceleration to +20% YoY, helped by larger modernization deals and early AI-workload demand. That growth rate topped expectations and calmed fears after a major October outage. Advertising again outpaced retail, posting +24% as Sponsored Products and streaming ad inventory (Prime Video, Twitch, NFL) scaled into the fall slate. Together, these segments offset margin headwinds tied to legal and restructuring charges.
Retail & cost structure
North America retail remained disciplined: $106.3B sales (+11% YoY) with continued logistics efficiency (regionalized network, middle-mile automation). International grew +14% to $40.9B despite FX drag. Shipping spend rose 8% to $25.4B, manageable versus top-line growth.
On profitability, reported operating income $17.4B includes the FTC settlement (~$2.5B) and severance (~$1.8B for ~14k roles). Ex-items, operating income implies low-teens margins for AWS and improving retail mix.
Guidance & read-through to holiday quarter
Management guided Q4 revenue to $206–213B and operating income to $21–26B, ahead of Street midpoints. The setup suggests: (1) sustained AWS momentum into calendar ’26 capex cycles, (2) ad growth north of 20% through peak season, and (3) retail mix shift toward higher-margin third-party and ads.
Stock reaction & setup
Shares spiked in after-hours as the combination of a top-line beat, AWS reacceleration, and solid holiday guide reset sentiment. The pivotal debate now moves from “will AWS reaccelerate?” to “how durable is 20%+ with AI uplift and easier comps?”
Segment snapshot
- AWS: $33B (+20% YoY). Watch bookings, GenAI service attach, and margin cadence as new capacity (e.g., custom silicon/cluster builds) ramps.
- Advertising services: $17.7B (+24%). Prime Video ads broaden the funnel; retail media remains a margin lever.
- North America retail: $106.3B (+11%); International: $40.9B (+14%).
Risks
- Macro sensitivity into the holidays; any consumer slowdown crimps unit volume.
- Cloud-AI capex cycle: near-term margin pressure if spending front-loads ahead of revenue.
- Regulatory/legal overhangs (e.g., settlements) and one-offs that can obfuscate core margin trajectory.
My take
This is the report bulls wanted: clean beats, AWS back to 20%, ads +24%, and better-than-feared Q4 guide. With retail efficiency doing its job, the narrative into 2026 becomes AWS + Ads compounding against a steadier cost base. Watch for proof that AI workloads translate to backlog growth and sustained double-digit AWS — that’s the multiple driver from here.
Conclusion
Amazon’s Q3 shows a business firing on its high-margin cylinders. Reported margins were muddied by legal and restructuring charges, but underneath, operating leverage is intact. If AWS holds ~20% growth and ads stay >20%, the path to structurally higher earnings power remains open — and tonight’s guide says management sees the same.
FAQ
How did AWS perform?
Revenue $33B, +20% YoY, best since 2022; investors cheered the reacceleration.
What about the ad business?
$17.7B, +24% YoY, beating expectations as retail media and streaming ads expanded.
Why is operating income “noisy”?
It includes a ~$2.5B FTC settlement and ~$1.8B severance; excluding these, operating income would have been ~$21.7B.
What did Amazon guide for Q4?
Revenue $206–213B and operating income $21–26B.
How did the stock react?
Shares jumped in after-hours on the beat and constructive holiday guide.
Disclaimer
This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any securities. Investing in equities involves risk, including possible loss of principal. Always conduct your own research or consult a licensed financial advisor before making investment decisions. Figures and guidance referenced are based on company disclosures and widely reported financial data as of October 30, 2025 and may be updated or revised subsequently.
