AMZN Amazon 10-Q 2026-09-30 section summaries

Amazon (AMZN) — Q3 and nine months ended September 30, 2026

Consolidated results

Q3 sales increased 12.1%; operating income rose 61.2%, while net income declined 2.4%. For 9M, sales grew 16.0% and operating income 44.3%. The much larger 9M net income increase was substantially influenced by investment-related gains, rather than operating performance alone. Other income (expense), net was a loss of $0.703B in Q3 2026 versus income of $10.186B a year earlier, but income of $68.359B for 9M versus $14.052B.

Segments

AWS was the largest operating-income contributor and its revenue grew 39.3% in Q3 and 35.1% for 9M. Its growth coincided with accelerated infrastructure investment.

Q3 revenue categories

*9M values shown where the reported growth-rate comparison with Q3 differed materially.

Cash flow and investment

Capex substantially exceeded operating cash flow in both periods. Net property-and-equipment additions were $78.262B in Q3 and $196.910B for 9M, versus $38.885B and $97.095B, respectively, in 2025. AWS accounted for $57.116B of Q3 additions and $147.236B for 9M. Nine-month investing cash outflow was $257.099B, including $63.753B of acquisitions, non-marketable investments and other net outflows. Financing cash inflow was $111.848B, including $115.100B of long-term debt proceeds.

Balance sheet, funding and equity

Cash, cash equivalents, restricted cash and marketable securities totaled $114.226B at September 30, 2026, compared with $123.029B at December 31, 2025; cash and cash equivalents were $55.783B and marketable securities $58.443B. Long-term debt face value was $180.887B, including $162.5B of unsecured senior notes. Amazon issued substantial debt in multiple currencies and drew a $17.5B unsecured term loan due in 2029. A potential secured, variable-rate supplier financing facility of up to approximately $80.0B could support infrastructure purchases beginning in 2027. Commercial paper and revolving credit capacity were unused at quarter-end.

Stockholders’ equity growth included a substantial increase in accumulated other comprehensive income, to $102.278B from $12.333B at September 30, 2025, mainly reflecting unrealized gains on available-for-sale debt securities.

Investments, commitments and risks

Private-company investment gains were a major source of earnings volatility. Amazon recorded $62.853B of upward fair-value adjustments to Anthropic preferred stock for 9M, primarily using observable pricing from financings but relying on significant unobservable valuation assumptions. Anthropic convertible notes had an estimated fair value of $146.2B at September 30, 2026, versus $45.8B at year-end 2025; Anthropic preferred stock was carried at $92.5B versus $14.8B. Amazon’s OpenAI preferred-stock investment reached $50.0B. Total private-company equity investments outside the equity method rose to $143.7B from $16.2B. These Level 3 investments are exposed to valuation, liquidity and funding risks.

AWS-related unrecognized performance obligations were approximately $578B, with a 6.1-year weighted-average remaining contract life. Amazon expanded its AWS commitments to OpenAI by $100B over eight years and to Anthropic by more than $100B over ten years; both arrangements include obligations related to AWS chips. Total contractual commitments were $883.581B, including debt, leases, property and equipment, purchase obligations and other commitments. Property-and-equipment commitments included $63.900B in 2027 and $13.955B in Q4 2026. Operating and finance lease liabilities’ present value totaled $114.783B.

Amazon’s derivative-accounted energy contracts covered approximately 690 million MWh, with an approximately 18-year weighted-average remaining duration. Long-dated fair-value estimates rely heavily on management assumptions; 9M unrealized gains were $0.690B. Other exposures include a $2.8B doubtful-account allowance and $3.0B inventory valuation allowance. Amazon agreed to acquire Globalstar for cash or stock at an implied value of approximately $10.9B including debt; closing is expected in 2027, subject to approvals and milestones.

Stock-based compensation was $5.406B in Q3 and $15.476B for 9M. Unrecognized compensation cost was $22.3B, with more than half expected to be expensed within 12 months. Outstanding RSUs were 223.3M at quarter-end. The 9M tax provision was $33.9B, including $15.2B of net discrete tax expense, primarily related to upward adjustments to Anthropic investments. Litigation and regulatory matters include antitrust, advertising, patent, biometric-privacy and tax disputes; Amazon notes that outcomes and remedies could materially affect results or cash flows.

Amazon (AMZN) — Q3 and nine months ended September 30, 2026

Consolidated results

Sales grew 12% in Q3 and 16% for 9M. At prior-year exchange rates, Q3 sales would have been $202.840 billion and 9M sales $582.013 billion: FX reduced reported Q3 sales by $896 million but increased 9M sales by $2.056 billion. Cost of sales declined as a share of revenue to 46.8% from 49.2% in Q3 and to 47.6% from 48.9% for 9M, as efficiencies partly offset higher product and shipping costs. Fulfillment expense also declined as a share of sales, to 14.9% from 15.4% in Q3 and 14.9% from 15.5% for 9M. Technology and infrastructure spending rose faster than sales, reaching 17.2% of Q3 revenue and 16.7% for 9M, versus 16.1% and 15.7%.

The prior-year other operating expense included a lawsuit settlement; remaining amounts primarily reflected impairments and intangible-asset amortization. Technology and infrastructure costs reflect investment, including depreciation and amortization, and Amazon expects spending to rise over time, including for AI and machine learning. These costs can also be affected by noncash energy-derivative fair-value changes.

Other income swung sharply: 9M gains primarily reflected upward observable-price adjustments to Amazon’s Anthropic preferred stock and reclassification gains on debt securities related to Anthropic convertible notes converted into preferred stock. The 9M 2026 tax provision was $33.9 billion, including $15.2 billion of net discrete tax expense primarily related to upward adjustments to Anthropic investments; the 9M 2025 provision was $14.1 billion, including $354 million of net discrete expense. These valuation-related items can make reported earnings volatile.

Segment results

North America sales grew 6%, supported by unit sales—including third-party sellers—advertising, and subscriptions. International sales grew 5%; Q3 FX reduced segment revenue by $927 million and operating income by $125 million. AWS revenue grew 39%, primarily from increased customer usage, partly offset by pricing changes, while higher sales drove operating-income growth partly offset by infrastructure investment. AWS represented 23% of Q3 sales versus 18% a year earlier. For 9M, segment revenue grew 11% in North America, 13% internationally, and 35% in AWS; AWS’s share of sales rose to 22% from 19%. AWS operating income for 9M was $48.555 billion versus $33.141 billion; North America was $26.113 billion versus $18.147 billion; International was $4.721 billion versus $3.710 billion.

Shipping costs were $28.3 billion in Q3 versus $25.3 billion and $81.9 billion for 9M versus $71.2 billion. Amazon expects shipping costs to keep rising as customers use shipping offers more, delivery methods become faster or more expensive, and services expand. It aims to offset this through scale, network optimization, supplier terms, and efficiency while maintaining low prices and shipping offers. Advertising revenue grew 12% year over year excluding FX in Q3, affected by Prime Day and other timing anomalies; Amazon expects high-teens advertising growth in Q4.

Cash flow, investment and liquidity

Trailing-12-month operating cash flow increased to $168.300 billion from $130.691 billion, while purchases of property and equipment net of sale proceeds and incentives rose to $210.657 billion from $115.903 billion. Free cash flow consequently moved to negative $42.357 billion from positive $14.788 billion. Amazon expects 2026 cash capital expenditures of approximately $220 billion and further increases in 2026 and meaningfully in 2027, mainly for technology infrastructure, much of it AWS-related, and fulfillment capacity.

Q3 net cash payments for acquisitions and other investments were $24.0 billion versus $786 million; 9M payments were $63.8 billion versus $2.4 billion. They included $50.0 billion invested in OpenAI Series C preferred stock during 9M ($21.3 billion in Q3) and $10.0 billion in Anthropic nonvoting preferred stock. Debt proceeds were $53.4 billion in Q3 and $135.8 billion for 9M; repayments of debt, finance leases, and financing obligations were $4.5 billion and $23.9 billion, respectively. At September 30, 2026, Amazon had $17.5 billion outstanding under its Term Loan and no borrowings under revolving credit facilities or commercial paper programs; it expects additional financing activity in 2026.

Cash, cash equivalents, and marketable securities at fair value totaled $114.2 billion at September 30, 2026, down from $123.0 billion at December 31, 2025; foreign-currency balances declined to $16.5 billion from $29.7 billion. Management expects operating cash, liquidity, and financing sources to cover at least 12 months of anticipated needs, while noting uncertainty in future cash requirements and potential higher borrowing costs. Additional equity or convertible issuance could dilute shareholders.

Outlook and risks

Q4 guidance calls for sales of $240–$247 billion, up 12%–16% year over year, including an approximately 60-basis-point unfavorable FX effect, and operating income of $28.5–$33.5 billion versus $25.0 billion in Q4 2025. The outlook assumes no impact from energy-derivative remeasurements and no additional acquisitions, restructurings, or legal settlements.

Amazon cites macroeconomic and geopolitical uncertainty, tariffs and trade policy, inflation and interest rates, energy and supply volatility (including memory chips), customer demand, labor constraints, competition, and execution of AI investment as risks to results. Inventory valuation depends on uncertain disposition and recovery assumptions: an additional 1% inventory valuation allowance at September 30 would have increased cost of sales by approximately $445 million. Demand-based supplier commitments may also create costs if reduced; tax estimates and ongoing controversies could materially affect results or cash flows.

Market risk — Q3 2026

Foreign-exchange exposure

International sales represented 21% of consolidated revenue. Foreign-exchange movements reduced International net sales by $927 million compared with Q3 2025. At September 30, 2026, foreign-denominated cash, cash equivalents, and marketable securities totaled $16.5 billion.

Losses on intercompany balances would be recorded in “Other income (expense), net.” Approximately $21.9 billion of Euro-, Canadian-dollar-, and Sterling-denominated senior notes were designated as net investment hedges. Related unrealized FX gains and losses are recorded in accumulated other comprehensive income until the hedged foreign operations are sold or substantially liquidated.

Interest-rate exposure

Interest-rate exposure is primarily associated with the investment portfolio and debt. Long-term debt is mainly fixed-rate and carried at amortized cost: changes in rates do not affect its carrying value in the consolidated financial statements, but do affect its fair value. Rising rates may reduce the fair value of fixed-rate marketable debt securities; principal losses could result if securities must be sold. Excess cash is generally invested in investment-grade short- to intermediate-term debt securities and AAA-rated money-market funds.

Equity and other investment exposure

At September 30, 2026, recorded equity, equity-warrant, and convertible-debt investments in public and private companies totaled $298.8 billion. Publicly traded equity and warrant investments totaled $6.7 billion and are carried at fair value, exposing them to market-price volatility. Private-company investments are valued using observable price changes or impairment assessments; private-company warrants and available-for-sale convertible debt are carried at fair value. Holdings primarily relate to Anthropic and OpenAI. Limited market data makes valuations more complex, and the company considers market-sensitivity analysis for these holdings impracticable.

Disclosure Controls and Internal Control over Financial Reporting

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at period-end. These controls provide reasonable, but not absolute, assurance that required information is recorded and reported on time and communicated to management so it can make timely disclosure decisions.

There was no quarterly change in internal control over financial reporting that materially affected, or was reasonably likely to materially affect, those controls. Management cautioned that controls cannot prevent or detect every error or instance of fraud.

Principal risks

Amazon’s risks reflect the breadth and complexity of its businesses and could affect revenue, profitability, cash flow, liquidity, reputation, and growth. Competition spans retail, cloud, advertising, devices, digital content, grocery, healthcare, communications, and logistics. Better-resourced or locally established competitors may have advantages in brand, pricing, vendor terms, and customer reach. AI and other technologies can lower barriers to entry and make comparison shopping easier, potentially driving higher investment or lower prices and reducing sales and profits.

Investment, execution, and operations

Expansion into new products, services, technologies, and markets—including substantial investment in automation, AI, and machine learning—may not succeed or earn an adequate return, and could lead to asset impairments. Rapid growth also strains management, systems, infrastructure, personnel, finances, and controls. Amazon’s fulfillment network and data centers face risks from forecasting and capacity-planning errors, inventory placement, staffing constraints, service interruptions, and higher shipping, storage, or handling costs. A limited number of shipping companies and suppliers, including semiconductor suppliers providing GPUs for AI infrastructure, expose operations to disruptions, shortages, unfavorable terms, and delays. Many suppliers offer no long-term guarantees of availability or pricing.

Labor-market tightness can increase payroll costs and hinder hiring, training, and retention, including of technical and AI talent. Changes in work environments, employment laws, or unionization could raise costs or reduce flexibility. Inventory is exposed to seasonal demand, product cycles, tariffs, price changes, spoilage, and long or nonreturnable commitments, creating risks of shortages, markdowns, and write-offs.

Retail sales are expected to be disproportionately concentrated in Q4. Peak demand can increase shipping expense and strain inventory, fulfillment capacity, staffing, websites, and customer service. After holiday sales, cash, cash equivalents, and marketable securities typically peak at December 31 along with accounts payable; both cash balances and payables generally decline in Q1 as vendors and sellers are paid. More broadly, demand, product mix, prices, returns, delivery promises, inflation, and labor, transportation, and infrastructure costs make results difficult to forecast, while significant spending and investment may not adjust quickly if sales weaken.

International, commercial, and technology exposures

International operations are significant to revenue and profit but may not achieve sustained profitability. Currency movements, local competition, infrastructure gaps, regulation, taxes, tariffs, trade policy, and geopolitical events add uncertainty. In China and India, ownership, licensing, cybersecurity, content, and other restrictions shape operations: China service arrangements depend on third parties holding local licenses, while foreign-ownership restrictions influence Amazon’s India marketplace model. China-based sellers contribute significantly to third-party seller services and advertising revenue, and China-based suppliers provide significant components and finished goods, creating exposure to trade restrictions and geopolitical disruption.

Cybersecurity breaches involving Amazon, vendors, or customers could expose sensitive data, trigger litigation or regulatory action, and damage trust. Past incidents did not materially affect operating results, but future incidents could be material; safeguards cannot ensure absolute security. Outages could disrupt orders and services, as systems are not fully redundant and disaster recovery or insurance may be insufficient. Energy shortages, extreme weather, climate change, public-health crises, conflict, and labor or trade disputes could also disrupt operations and supply chains. Climate risks include higher operating, transition, and compliance costs and possible reputational or demand impacts.

Marketplace activity can expose Amazon to counterfeit, unlawful, fraudulent, or misdescribed products, customer reimbursements under the A-to-z Guarantee, and product-liability claims. Insurance and contractual indemnification may be inadequate. Amazon also faces intellectual-property claims, including risks associated with AI-generated or AI-enabled technology and content. Commercial agreements and alliances may require substantial resources, constrain capacity, or produce variable compensation; terminations, renewals, partner performance, and integration challenges could reduce revenue or income. Acquisitions and investments carry execution, integration, regulatory, and impairment risks, and may require funding with cash, debt, or equity.

Regulation, litigation, and financial exposure

Regulatory scrutiny is expanding across e-commerce, cloud, AI, privacy, advertising, healthcare, payments, employment, transportation, and environmental matters. Changing laws and interpretations could increase compliance costs, impose fines or other liabilities, restrict business practices or services, reduce demand, or impede growth. Payment processing also faces fraud, third-party dependence, rising fees, changing card-network rules, and licensing, capital, safeguarding, data, and consumer-protection requirements.

Amazon faces competition and consumer-protection investigations and litigation involving its stores, fulfillment network, Prime, AWS, and allegations including price fixing and monopolization brought by state attorneys general and the FTC. The company disputes the claims and intends to defend itself; outcomes and legal reserves are uncertain, and losses could exceed recorded amounts. Broader proceedings concern intellectual property, taxes, labor and delivery-driver classification, privacy, security, commercial disputes, and products and services, including AI. Matters could require substantial payments, sanctions, changed practices, or service limits, while also consuming management time and causing operational or reputational harm.

Tax-law changes and disputes—including marketplace and advertising taxes, global minimum taxes, and challenges such as those in Italy—could increase tax expense or liabilities. Assessments and final outcomes may differ materially from accruals. Public-sector contracts bring procurement, audit, and funding risks; violations could lead to termination, repayment, fines, or suspension or debarment. Finally, interest rates, market sentiment, technology-sector conditions, results, and spending expectations can make Amazon’s shares volatile, potentially affecting financing and increasing cash compensation costs or equity dilution.

Credit facilities and term loan

On October 27, 2026, Amazon replaced its existing revolving credit agreements, which had aggregate capacity of $20.0 billion, with two unsecured revolving facilities totaling the same amount:

The prior agreements were terminated on the replacement date. Borrowings under the new facilities may support working capital and general corporate purposes, including backstopping commercial paper. Outstanding amounts bear the applicable benchmark rate plus 0.45%; undrawn commitments incur a 0.03% fee. The agreements include customary covenants and default provisions but no financial covenants. Uncured or unwaived defaults may result in acceleration and termination of commitments.

Amazon also amended its June 8, 2026 term loan agreement to align its lien limitation, cross-default and cross-acceleration provisions with those in the new revolvers. The $17.5 billion senior unsecured delayed-draw term loan was fully drawn before commitments expired on September 30, 2026, and remains outstanding.

Executive trading plan

On August 10, 2026, CFO Brian T. Olsavsky adopted a Rule 10b5-1 trading plan to sell up to 46,827 Amazon shares through August 20, 2027, subject to the plan’s conditions.