Amazon Sells Almost Everything. Most of Its Profit Comes From Renting Out Computers.

In one line: Amazon earns most of its operating income from AWS, which rents computing to other companies, while its store keeps a thin share of each sale. Watch AWS sales growth against the contracts customers have signed, capital spending against cash from operations, and North America's operating margin.

At a glance

• Latest: in July–September 2026, AWS sales rose 39% from a year earlier and earned 63% of Amazon's operating income. Over the 12 months to September, capital spending of $210.7 billion exceeded $168.3 billion of cash from operations
• Biggest risk: data centers built faster than AWS customers fill them, and shoppers starting their searches with AI assistants outside Amazon
• Reports: Quarterly. Next results: see Earnings Dates.

On October 29, 2026, Amazon reported net sales of $201.9 billion for July–September 2026, up 12% from a year earlier. Operating income rose to $28.1 billion, from $17.4 billion a year earlier, when it included a $2.5 billion charge for a settlement with the US Federal Trade Commission. AWS, its cloud computing business, earned $17.8 billion of that operating income on $46.0 billion of sales.

Amazon's shares fell more than 6% in after-hours trading. Over the 12 months to September 2026, Amazon's capital spending, mostly on data centers and servers, was $42.4 billion more than the cash its operations brought in. In the 12 months to September 2025, cash from operations had exceeded capital spending by $14.8 billion.

What it sells vs. what it earns on

Amazon sells goods it buys and stocks itself, and it lets other sellers, which it calls third-party sellers, list their goods on its site for a fee. In July–September 2026, other sellers accounted for 61% of the units sold on the site. Amazon also sells advertising to those sellers and to other brands, and it charges a yearly fee for Prime, a membership that includes fast delivery.

When Amazon sells its own goods, it holds the inventory and keeps a thin margin. When another seller makes the sale, Amazon keeps a fee and often charges again to store and ship the goods. Advertising is sold beside search results on Amazon's own site, where the shopper is already deciding what to buy, and on its video services.

AWS rents computing, storage and AI services to other companies. Amazon built these systems to run its own store and began renting them out in 2006. Many large AWS customers sign contracts that run for years.

Amazon reports three segments: North America, International and AWS. It reports revenue by type, such as advertising and seller fees, but not the profit of each.

Table 1 — Amazon's segments and revenue lines, July–September 2026

The revenue types add up to Amazon's total. All but AWS fall within North America and International. Amazon reports operating income for the segments only. Figures may not add up because of rounding. Source: Amazon Q3 2026 results.

AWS added $13.0 billion of revenue from a year earlier, 60% of Amazon's revenue growth. Amazon's own online sales added $1.1 billion. Seller fees and advertising added $5.9 billion.

What moves the profit

Operating income ≈ (Own-store sales × Markup on goods + Seller fees + Advertising + Subscriptions − Fulfillment and shipping) + (AWS usage × Price − Depreciation and power) − Technology, marketing and overhead

• Own-store sales and markup on goods. Goods Amazon buys and resells, and what it keeps above their cost. Amazon reports the sales, not the markup.
• Seller fees. Commissions and fees for storage and shipping paid by other sellers. Reported as third-party seller services revenue.
• Advertising. Paid placement in Amazon's search results and on its video services. Amazon reports the revenue but not the operating income, which sits inside North America and International.
• Subscriptions. Prime membership fees and other subscriptions. Reported as subscription services revenue.
• Fulfillment and shipping. The cost of warehouses, packing and delivery. Reported as fulfillment expense for the whole company.
• AWS usage and price. Computing, storage and AI services rented to other companies. Not disclosed separately. AWS revenue and operating income reflect them.
• Depreciation and power. The cost of data centers, servers and warehouses, spread over their useful lives, and the electricity that runs them. Each quarter, Amazon reports depreciation and amortization for the whole company.
• Technology, marketing and overhead. The cost of Amazon's own systems, its marketing and its corporate staff, spread across all three segments.

Reading the earnings: what to watch, and how

Amazon's results release, quarterly report (Form 10-Q) and earnings call are all at ir.aboutamazon.com.

• AWS sales growth, against its backlog. Read it: most of the backlog is for AWS. If backlog grows faster than sales, demand is running ahead of the capacity in place, and if slower, new contracts are not keeping up with the capacity being built. Latest: AWS sales rose 39% in July–September 2026 from a year earlier. Amazon said its backlog was $578 billion at the end of September 2026, more than double a year earlier.
• AWS operating margin, against depreciation. Read it: new data centers add depreciation before they fill. If the AWS margin holds or rises while Amazon's depreciation rises, AWS sales are growing fast enough to cover the new cost, and if it falls, capacity is running ahead of use. Latest: 38.7% in July–September 2026, against 34.6% a year earlier, while Amazon's depreciation and amortization, for all segments, rose 25% from a year earlier to $20.9 billion.
• North America operating margin. Read it: a rising margin means seller fees and advertising are growing faster than Amazon's own low-margin sales, or delivery costs are falling, and a falling margin means the reverse. Latest: 7.7% in July–September 2026, against 4.5% a year earlier. Without the $2.5 billion settlement charge, the year-earlier margin would have been 6.9%.
• Capital spending, against cash from operations. Read it: capital spending here is purchases of property and equipment, net of sale proceeds and incentives. A widening gap over cash from operations means Amazon is building faster than its business brings in cash, and a narrowing one means the reverse. Latest: $210.7 billion against $168.3 billion over the 12 months to September 2026, a gap of $42.4 billion.

Leading indicators (outside Amazon's filings)

• AI companies' computing agreements. AI developers sign multi-year agreements for computing before they use it. Signed agreements enter AWS's backlog first. (AWS usage)
  • When: as announced. Where: the companies' announcements.
  • Latest: on April 20, 2026, Anthropic, the developer of the Claude AI models, agreed to spend more than $100 billion on AWS over ten years. On February 27, 2026, OpenAI expanded its AWS agreement by $100 billion over eight years.
• US online retail sales. Faster growth in US e-commerce points to more orders on Amazon's site and more seller fees. (own-store sales and seller fees)
  • When: quarterly, about seven weeks after each quarter ends. Where: the US Census Bureau's quarterly e-commerce report.
  • Latest: in April–June 2026, US e-commerce sales were $340.2 billion, up 12.2% from a year earlier, 17.1% of all retail sales.

What Wall Street is asking

Across Amazon's last four earnings calls, from February to October 2026, analysts kept returning to a few questions.

1. "How much will Amazon spend on data centers, and is the spending paying back sooner?" In October, Andy Jassy, the chief executive, said Amazon expects about $220 billion of capital spending for the full year 2026 and "meaningfully more in 2027." On the point at which its infrastructure breaks even, he said "we're continuing to move that left," meaning earlier.
2. "Does AWS have the demand to fill the capacity Amazon is building?" In October, Jassy said AWS had "very good visibility into 2027 and 2028" and expected AWS sales to grow more than 40% in each of those two years.
3. "What will AWS's operating margin be as the new capacity comes on?" In October, Brian Olsavsky, the finance chief, said "we are not guiding at all on our margin for AWS." He said the mix of AI work and the price of components would affect it.
4. "Will AI shopping assistants outside Amazon take searches, and ad revenue, away from its site?" In October, Jassy said they were not yet affecting Amazon's advertising, because "few customers are doing much shopping this way yet." Amazon said more than 400 million customers had used its own assistant, Alexa for Shopping, in the past 12 months.
5. "Will Amazon sell its own AI chips, Trainium, to other companies?" In October, Jassy said Amazon intends to do so "late in 2027."

A note on valuation

Amazon's long-term debt rose to $173.1 billion on September 30, 2026, from $65.6 billion at the end of 2025.

On October 29, 2026, before the results, Amazon's shares closed at $243.79. Its enterprise value, the market value of about $2.64 trillion plus long-term debt minus $114.2 billion of cash and marketable securities, was about $2.69 trillion. That was about 26 times its operating income of $104.4 billion for October 2025–September 2026.

The bottom line

AWS, not the store, earns most of Amazon's operating income. Amazon is spending more on property and equipment, mostly data centers, than the cash its operations bring in. Its signed contracts have more than doubled from a year earlier, but whether customers fill the new capacity is not yet known. (See: Alphabet Sells Ads Beside Search Results. Its Fastest Growth Comes From Renting Out Computing.)

Can Amazon rent out its delivery network as profitably as its computing? In Earnings Driver, the Amazon chapter shows how Amazon builds for its own store and then rents what it built to everyone else, from computing to warehouses and delivery.

Sources: Amazon Q3 2026 results release (October 29, 2026); Amazon Q2 2026 results release (July 30, 2026) and Form 10-Q for the quarter ended June 30, 2026; Amazon Q3 2025 results release (October 30, 2025) and Form 10-Q for the quarter ended September 30, 2025; Amazon Q4 2025 results release (February 5, 2026); Amazon earnings calls of February 5, April 29, July 30 and October 29, 2026; Anthropic announcement (April 20, 2026); Amazon and OpenAI announcement (February 27, 2026); US Census Bureau quarterly e-commerce report (August 18, 2026); share price as of October 29, 2026.

For sources that work for any company — filings, earnings calendars, consensus estimates — see Where to find the numbers.

Educational only, not investment advice. Figures as of the periods noted.