#AMZN Q3 2026 earnings review: AWS +39% on a $578B backlog, FCF −$42B, debt tripled Revenue $201.9B, +12% (~16% ex the Prime Day shift to Q2), in line with the ~$202B consensus; EPS $1.89 vs ~$1.96, −3%. Both are base effects: Q3 2025 had $9.5B of Anthropic gains below the operating line and $4.3B of charges above it ($2.5B FTC settlement, $1.8B severance). Operating income $28.1B, +61% reported, +29% ex-charges; AWS is $6.3B of the $10.7B added. Strengths • AWS $46.0B, +39%, the fastest in nearly five years, +$3.8B QoQ; operating income $17.8B, +55%; Jassy guides to >40% growth in both 2027 and 2028. • Backlog $578B, up triple digits, 6.1-year life; OpenAI added $100B over 8 years, Anthropic >$100B over 10. • Operating margin 13.9%, a record; operating income above the $26.5B top of guidance. • North America margin 7.7% vs 6.9% ex-FTC a year ago; International 3.7% vs 2.9%; third-party services +10% ex-FX. • Operating cash flow $42.4B, +19%; TTM $168.3B, +29%. Cash taxes $5.3B YTD on a $33.9B provision. • Q4 guide: revenue $240–247B (+12–16%), operating income $28.5–33.5B vs $25.0B, incl. most Amazon Leo costs; ads back to high-teens growth. Weaknesses • Capex $77.3B, 2.2x YoY; $172B YTD net vs a ~$220B guide, so either Q4 falls to ~$48B or the guide moves; 2027 "meaningfully more". TTM free cash flow −$42.4B vs +$14.8B; $21.5B more accrued, unpaid. • Long-term debt $173.1B vs $65.6B at year-end: $115B issued YTD ($48B in Q3 incl. a $17.5B term loan), plus an $80B secured supplier loan facility for 2027–28; interest expense $1.7B, 3.1x; no buybacks. • Net income is mostly marks: 9M net income $113.6B includes $68.4B of other income, $62.8B of it the Anthropic write-up; $50B went into OpenAI preferred in 2026 ($21.3B in Q3); AI stakes carried at $143.7B, Level 3. • AWS margin 38.7% vs 39.4% in Q2 on memory costs and AI mix; no margin guide. • Retail slowed: online stores +2%, North America +6%, advertising +12% after +22% (Prime Day ~8.5pp of it). • FTC and 22 states sued in August over reserve prices in sponsored-ad auctions. Bottom line AWS is the report: the fastest growth in five years and six years of contracted backlog, while the record margin and the +61% headline lean on last year's charges. The cash side has flipped: FCF −$42B TTM, debt tripled, an $80B vendor facility, 2027 capex higher still. The Q4 question is the 2027 capex number and whether AWS holds a 38% margin as memory prices and AI mix bite. #AMZN #earnings #Q3_2026 #BigTech