Amazon Earnings Miss Estimates as Ad Growth Drops to 11%

Amazon's advertising segment experienced a sharp deceleration in the third quarter, with growth falling to 11% year over year. This slowdown contributed to the company missing Wall Street expectations for both total revenue and earnings per share.

The ad business had maintained steady momentum for the prior year, with growth rates hovering near 22% for four consecutive quarters. That pace accelerated to 26% in the second quarter of 2026 before dropping significantly in the most recent period. Amazon attributed the decline to holding Prime Day in the second quarter for major markets and unfavorable foreign exchange rates.

For the quarter, the company recorded net sales of $201.9 billion. Diluted earnings per share stood at $1.89. These figures lagged behind the consensus estimates compiled by LSEG, which projected revenue of $202.31 billion and earnings of $1.96 per share. Following the announcement, Amazon stock declined by 4% in after-hours trading.

Regional performance varied across the company's operations. North American revenue increased by 6% to reach $112.9 billion. International sales grew by 5% to $43.1 billion. The cloud computing division, Amazon Web Services, outperformed its peers, with revenue rising 39% to $46 billion. This marked the fastest growth for that segment in nearly five years.

Amazon projects fourth-quarter revenue growth between 12% and 16%. This estimate suggests total quarterly sales will fall between $240 billion and $247 billion. The company also expects advertising growth to recover to the high teens during that period.

Andy Jassy, Amazon's president and CEO, stated in prepared remarks that investments in AWS infrastructure are yielding results. He cited the 39% year-over-year revenue growth and a $184 billion revenue run rate. Jassy projected that AWS growth rates would exceed 40% in both 2027 and 2028.

During the earnings call on Thursday, Jassy emphasized that AI adoption is driving demand for core capabilities such as reinforcement learning and tool calling. He highlighted the Graviton processor family and described the potential for two trillion-dollar revenue businesses within five to ten years as an extraordinary opportunity.