$Amazon(AMZN.US)Context: Amazon reported its Q3 2026 financial results. AWS revenue growth accelerated further and beat …
$Amazon(AMZN.US)
Context: Amazon reported its Q3 2026 financial results. AWS revenue growth accelerated further and beat market expectations, while the group's operating margin reached a record high. However, total revenue fell slightly short of expectations, advertising revenue came in below expectations, and AI infrastructure investments continued to widen the free cash flow gap. In the third quarter, Amazon reported revenue of $201.944 billion, up 12% year-over-year, which was $366 million below the market consensus estimate of $202.310 billion. The company specifically noted that Prime Day events in most major markets were moved to the Q2 this year, whereas last year they occurred entirely in the third quarter. AWS was a key highlight this quarter, with revenue reaching $45.984 billion, up 39.3% year-over-year, accelerating further from approximately 37% in the previous quarter and topping market expectations of 38%. Meanwhile, the advertising business underperformed expectations, posting revenue of $19.637 billion, an 11% year-over-year increase, which fell $1.183 billion short of the market consensus of $20.820 billion. The company stated that advertising growth was affected by Prime Day and other timing factors, and it expects fourth-quarter advertising revenue growth to rebound to nearly 20% YoY. Together, AWS and the retail operations drove consolidated operating income up 61% year-over-year to $28.076 billion, pushing the operating margin to a record high of 13.9%, up from 9.7% in the prior-year period.
My Trade: Looking to accumulate more only if it drops below my cost price. More focused on Google for now.
Takeaway: Q3 Free Cash Flow posts negative $33.456 billion. Cash flow pressure stemmed primarily from expanding capital investments. This reiterates investors' concern following Google's negative FCF - investors want stronger balance sheet and faster ROI. Unfortunately, Capex usually does not translate into profits so quickly. @Captain's Treasure
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