Amazon reported third-quarter net sales growth of 13% year-over-year, driven by strength across its core e-commerce business and continued recovery in consumer demand. Net income rose 38% over the same period, reflecting operating leverage and higher contributions from its cloud and advertising segments. The company’s diversified revenue base and disciplined cost management helped expand overall operating margins sequentially, positioning Amazon for further margin improvement heading into 2026.

Amazon Web Services (AWS) delivered 20% year-over-year revenue growth in the quarter, matching its highest growth rate since 2022. The rebound was fueled by strong enterprise demand for cloud infrastructure to support artificial intelligence workloads. AWS also reported multibillion-dollar annualized revenue from its in-house AI accelerator chips, which grew 150% sequentially. Management highlighted ongoing customer additions in financial services and telecommunications, underscoring AWS’s durable market leadership.

Amazon’s advertising segment generated $17.7 billion in revenue during the quarter, up 24% year-over-year. Although it represents less than 10% of total net sales, the high-margin nature of search-and-display ads on the platform has meaningfully boosted consolidated profit margins. The business is rapidly closing the gap with larger digital-ad competitors, and new self-service tools are speeding adoption among small- and mid-sized merchants.

Shares currently trade at a forward price-to-earnings ratio of 28, well below the company’s five-year average of 44 and below peer multiples in both retail and cloud. Consensus estimates call for mid-teens percentage earnings-per-share growth through 2027, implying potential upside of more than 60% over the next three years if multiples remain stable. With its leading positions in e-commerce, cloud computing and digital advertising—and growing optionality from AI investments—Amazon offers a compelling risk/reward profile for long-term investors.