Amazon Q3: Ad Revenue Growth Slows to 11% While AWS Soars

Amazon reported third quarter results that fell short of analyst expectations on both revenue and earnings, with the company citing a shift in its Prime Day sales event and unfavorable currency exchange rates as primary drivers for the shortfall. The deceleration in the advertising segment marked a sharp reversal from the consistent double-digit growth the business had maintained for the prior year.

Advertising revenue growth, which had hovered near 22% year over year for four consecutive quarters before surging to 26% in the second quarter, dropped to 11% in the most recent period. The company projects that this growth rate will recover to the high teens in the fourth quarter. Amazon posted net sales of $201.9 billion and diluted earnings per share of $1.89. These figures trailed the consensus estimates compiled by LSEG, which projected revenue of $202.31 billion and earnings per share of $1.96.

Following the announcement, Amazon stock declined by 4% in after-hours trading. The company now forecasts fourth quarter revenue growth between 12% and 16%, placing total revenue in the range of $240 billion to $247 billion. Regional performance showed North American revenue rising 6% to $112.9 billion, while international revenue grew 5% to $43.1 billion.

The cloud computing division, Amazon Web Services, outperformed expectations with a 39% revenue increase to $46 billion. This represents the fastest growth rate for the segment in nearly five years, exceeding the 20% growth recorded in the third quarter of 2025 by nearly 20 percentage points. Andy Jassy, Amazon’s president and chief executive officer, stated that investments in AWS functionality and infrastructure are yielding results, citing a revenue run rate of $184 billion.

Jassy indicated that the company anticipates growth rates above 40% for AWS in both 2027 and 2028. He described the adoption of artificial intelligence as the biggest transformation in the lifetime of the industry, noting that AI drives core capabilities such as reinforcement learning and tool calling. Jassy also highlighted the performance of the company’s Graviton family of processors in supporting this expansion.

The executive noted that Amazon’s retail strategy, which combines a wider product selection with faster delivery, is improving margins while capturing more market share. He characterized the company’s newer ventures, including Grocery, Pharmacy, Amazon Leo, and Zoox, as progressing encouragingly. Jassy suggested that the company may develop two trillion-dollar revenue businesses within the next five to 10 years, a milestone he described as an unusual opportunity in corporate history.