Goldman Sachs: Amazon’s third-quarter profit beats expectations, but AWS growth falls short of the buy-side threshold

Why is Goldman Sachs still cautious despite AWS growth of nearly forty percent?

Third-quarter AWS revenue was 45.98 billion dollars, up 39.3% year over year and above Goldman Sachs and consensus estimates, but below the growth threshold of more than 42% watched by the buy side in the weeks before the results.
Goldman Sachs expects an initially negative share-price reaction after the results: although AWS, online stores and advertising revenue exceeded its own and market expectations, overall results across most businesses were neutral to slightly weak relative to expectations.
In its forward-looking commentary, the company mentioned AWS growth of approximately 40% in 2027 and 2028; Goldman Sachs is watching the relationship between visible demand and the deployment of additional computing capacity over the next 6–12 months.

Third-quarter total revenue was 201.94 billion dollars, up 12.1% year over year; it was slightly above Goldman Sachs’ forecast of 201.51 billion dollars but below the consensus estimate of 202.35 billion dollars.
GAAP operating profit was 28.1 billion dollars, above the market estimate of 26.16 billion dollars and the upper end of the company’s previous guidance of 22.5 billion–26.5 billion dollars. The operating margin was 13.9%.
AWS operating profit was 17.77 billion dollars, with a margin of 38.7%; North American and international operating profit was 8.72 billion and 1.58 billion dollars respectively, with margins of 7.7% and 3.7% respectively.
Retail-related businesses grew more slowly than AWS: online stores revenue was 68.47 billion dollars, up 1.6% year over year; third-party seller services revenue was 46.49 billion dollars, up 9.4%; and advertising revenue was 19.64 billion dollars, up 10.9%.

The company expects fourth-quarter revenue of 240 billion–247 billion dollars, a range that encompasses the consensus estimate of 244.4 billion dollars; the guidance includes a negative foreign-exchange impact of 0.6 percentage points.
Fourth-quarter GAAP operating profit guidance is 28.5 billion–33.5 billion dollars, with the upper end slightly above the market estimate of 32.9 billion dollars. However, the operating margin calculated from the midpoints of revenue and profit guidance is 12.7%, below the market estimate of 13.5%.
Amazon reiterated capital expenditure of approximately 220 billion dollars for 2026. Goldman Sachs is watching the capital required for future computing capacity expansion, spending and financing arrangements, and when new capacity comes online.