--- title: "Amazon's AWS grew 39.3% on $48.1 billion of new debt, and the stock fell as much as 11%" description: "AWS grew 39.3% and Amazon posted a record 13.9% operating margin, and the stock still fell as much as 11% after hours on October 29: the bar that mattered was 43% cloud growth, and the quarter behind the print was bridged with $48.1 billion of new long-term debt and a record $42.4 billion trailing cash outflow." publisher: "The Inference" section: "Data Center" published: 2026-10-29T21:17:24.929Z modified: 2026-10-29T21:17:24.929Z canonical: https://theinference.org/article/amazon-s-aws-grew-39-3-on-48-1-billion-of-new-debt-and-the-stock-fell-as-much-as-11 language: en keywords: "Amazon, AWS, Earnings, Capex, Debt" --- # Amazon's AWS grew 39.3% on $48.1 billion of new debt, and the stock fell as much as 11% > AWS grew 39.3% and Amazon posted a record 13.9% operating margin, and the stock still fell as much as 11% after hours on October 29: the bar that mattered was 43% cloud growth, and the quarter behind the print was bridged with $48.1 billion of new long-term debt and a record $42.4 billion trailing cash outflow. After the bell on October 29, [Amazon](https://theinference.org/markets/companies/amazon) printed its fastest AWS growth in nearly five years, a 13.9% operating margin it calls the highest in its history, and a projection from Chief Executive [Andy Jassy](https://theinference.org/markets/people/andy-jassy) that the cloud unit grows more than 40% in both 2027 and 2028 [1]. The stock still fell more than 7% in early after-hours trading [4] and as much as 11% as the evening ran [2]. The same session, [Alphabet](https://theinference.org/markets/companies/alphabet) [lost $482 billion of market value, the biggest one-day drop in its history](https://finance.yahoo.com/markets/article/alphabet-heads-for-a-500-billion-drop-in-market-value-the-biggest-in-its-history-134824763.html) [3]. ## It cleared the Street and missed the whisper AWS, Amazon's cloud division, sold $46.0 billion in the quarter, up 39.3% year over year, a $184 billion annual run rate, ahead of the 37.7% growth analysts expected, per [TMT Breakout](https://www.tmtbreakout.com/p/amazon-amz-intel-intc-first-take), a tech research service [1][2]. Revenue of $201.9 billion and earnings of $1.89 a share each came in just under estimates; the earnings miss sits below the operating line, in rising interest costs on Amazon's growing debt and the absence of last year's $9.5 billion gain on its [Anthropic](https://theinference.org/markets/companies/anthropic) stake [1][4][5]. The bar that mattered sat higher. Large holders had whispered about 43% AWS growth and a 40% segment margin; the quarter printed 39.3% and 38.7%, the margin down from 39.4% in the second quarter [1][2]. The fourth-quarter guide, $240 billion to $247 billion of sales and $28.5 billion to $33.5 billion of operating income, left both midpoints under the Street [1][2]. *Chart: **Six quarters of AWS acceleration still landed under the whisper** Line chart of AWS year-over-year revenue growth from Q2 2025 to Q3 2026, rising from 17% to 39%, still below a 43% reference line.* *Year-over-year AWS net sales growth excluding currency effects, percent, by quarter; reference line is the buyside whisper per TMT Breakout. Sources: Amazon Q3 2026 release [1]; TMT Breakout [2]. [1][2]* ## The growth is running on the bond market Net capital spending ran $75.9 billion in the quarter against a $58.2 billion Street forecast, and the full-year plan held at about $220 billion [1][2]. Trailing free cash flow, the cash left after capital spending, swung to a record $42.4 billion outflow from a $14.8 billion inflow a year earlier, on a $94.8 billion jump in equipment purchases Amazon attributes primarily to AI [1][3]. *Chart: **Capex has more than doubled in eight quarters as the AI build runs** Line chart of Amazon's capital spending by quarter from Q3 2024 to Q2 2026, climbing from about $21 billion to $53 billion a quarter.* *Capital spending by fiscal quarter, US$ billions, from Amazon's SEC filings; the series ends at Q2 2026, the last quarter before tonight's release, which put third-quarter net capital spending at $75.9 billion. Source: Amazon quarterly figures from SEC filings [8]. [8]* The bridge is borrowing: $48.1 billion of long-term debt raised in the quarter alone, taking long-term debt to $173.1 billion at September 30 from $65.6 billion at the end of 2025 [1]. This publication [reported Amazon's warning that AI stays free-cash-flow negative for years](https://theinference.org/article/amazon-on-tape-ai-stays-free-cash-flow-negative-for-years-3-billion-of-nvidia-racks-monthly) on October 19, and the [$15 billion Anthropic loan against AWS capacity](https://theinference.org/article/amazon-lends-anthropic-15-billion-to-buy-110-billion-of-aws-capacity-from-amazon) on October 27; [tonight's filing](https://www.sec.gov/Archives/edgar/data/1018724/000101872426000038/0001018724-26-000038-index.htm) puts numbers on both [1]. *Chart: **Amazon swung from $18.2 billion of free cash flow to a $42.4 billion outflow in six quarters** Line chart of Amazon's trailing free cash flow from Q2 2025 to Q3 2026, falling from $18.2 billion to negative $42.4 billion and crossing zero in mid-2026.* *Trailing twelve months, US$ billions; operating cash flow less purchases of property and equipment net of proceeds from sales and incentives, as printed in the release. Source: Amazon Q3 2026 release [1]. [1]* ## The bull case is printed, and so is the bill Jassy's bull case sits in the release: AWS growth above 40% in both 2027 and 2028, and his line that there has never been a trillion-dollar revenue business and Amazon may have two of them in the next five to ten years [1]. Advertising, the other profit engine, grew about 11% to $19.6 billion against an 18% Street expectation; Amazon blames Prime Day timing and guides growth back to the high teens for the fourth quarter [1][2][6]. The fall also cut about $8.2 billion from founder Jeff Bezos, who owns 8% of the company, on top of a 4.25% regular-session drop to $243.79 [5]. Investors rewarded [Microsoft](https://theinference.org/markets/companies/microsoft) for 48% growth in Azure, its cloud platform, with spending held in check, and sold Amazon and Alphabet for spending past their cash flow [5][7]. ## What the fourth quarter has to prove Two readings decide the trade. Guidance implies about $47.8 billion of fourth-quarter capital spending, $17 billion below the Street's $64.8 billion; delivered, that step-down would slow the cash burn, which is why nobody is banking on it yet [2]. The 2027 budget stays unprinted, with buyside expectations near $325 billion to $350 billion against a Street figure around $287 billion [2]. AWS now compounds at 39% on borrowed money, and the bond market that lent $48.1 billion of it this quarter holds a claim on that growth before shareholders do [2]. ## Takeaway AWS compounded 39.3% on $48.1 billion of new debt: the growth case printed, the cash burn hit a record $42.4 billion, and the Q4 capex step-down nobody banks on is now the trade. ## Sources 1. [SEC Form 8-K, Amazon.com Inc., third quarter 2026 results press release (Exhibit 99.1), filed 29 October 2026](https://www.sec.gov/Archives/edgar/data/1018724/000101872426000038/0001018724-26-000038-index.htm) 2. [TMT Breakout, "Amazon (AMZ) Intel (INTC) First Take", 29 October 2026](https://www.tmtbreakout.com/p/amazon-amz-intel-intc-first-take) 3. [Yahoo Finance, "Alphabet loses $482 billion in market value, the biggest drop in its history", 29 October 2026](https://finance.yahoo.com/markets/article/alphabet-heads-for-a-500-billion-drop-in-market-value-the-biggest-in-its-history-134824763.html) 4. [GeekWire, "AWS growth hits 39%, its fastest in nearly five years, as Amazon misses on earnings", 29 October 2026](https://www.geekwire.com/2026/aws-growth-hits-39-its-fastest-in-nearly-five-years-as-amazon-misses-on-earnings/) 5. [Forbes, "Amazon Falls Short Of Overall Revenue Prediction Despite AWS Revenue Growth Nearing 40%", 29 October 2026](https://www.forbes.com/sites/fionariley/2026/10/29/amazon-falls-short-of-overall-revenue-prediction-despite-aws-revenue-growth-nearing-40/) 6. [TheWrap, "Amazon Shares Sink Over 5% on Earnings Miss, Softer Than Expected Q4 Sales Guidance", 29 October 2026](https://thewrap.com/industry-news/business/amazon-earnings-q3-2026/) 7. [Los Angeles Times (Bloomberg), "Google parent loses $511 billion in market value as AI pressures search and ad sales", 29 October 2026](https://www.latimes.com/business/story/2026-10-29/google-parent-loses-511-billion-in-market-value-as-ai-pressures-search-ad-sales) 8. [Amazon, quarterly figures from its SEC filings, retrieved 29 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001018724) --- Amazon's AWS grew 39.3% on $48.1 billion of new debt, and the stock fell as much as 11% — The Inference. Canonical: https://theinference.org/article/amazon-s-aws-grew-39-3-on-48-1-billion-of-new-debt-and-the-stock-fell-as-much-as-11