Amazon Ad Growth Slows to 11% in Third Quarter as Earnings Miss Wall Street Forecasts

Amazon reported slower growth in its advertising business for the third quarter and fell short of Wall Street expectations on both revenue and earnings. The company pointed to two factors: its decision to hold Prime Day in the second quarter for most of its larger markets, and unfavorable foreign exchange rates.

Advertising revenue growth had hovered around 22% year over year for the previous four quarters before rising to 26% in the second quarter of 2026. In the third quarter it slowed to 11%. Amazon said it expects advertising growth to climb back to the "high teens" in the fourth quarter.

The company posted net sales of $201.9 billion and diluted earnings per share of $1.89. Analysts surveyed in a consensus compiled by LSEG had expected revenue of $202.31 billion and earnings per share of $1.96. Amazon's stock was down 4% in trading after the market closed following the report.

Looking ahead, Amazon projects fourth-quarter revenue growth of between 12% and 16%, which would put revenue between $240 billion and $247 billion.

By region, North American revenue rose 6% to $112.9 billion, while international revenue grew 5% to $43.1 billion. Amazon Web Services, the company's cloud unit, saw revenue increase 39% to $46 billion. That was the segment's fastest growth in nearly five years and almost 20 percentage points above the 20% growth it recorded in the third quarter of 2025.

In prepared remarks, Andy Jassy, Amazon's president and CEO, said the company's investment in AWS functionality and infrastructure is paying off. He cited year-over-year revenue growth of over 39% in the quarter, a $184 billion revenue run rate, and projected growth rates above 40% in both 2027 and 2028.

Jassy also said Amazon's broader selection and faster delivery are helping it win more retail market share while improving margins. He described newer businesses, from Grocery to Pharmacy to Amazon Leo to Zoox, as "progressing encouragingly." He added: "There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years."

During the company's earnings call on Thursday, Jassy stayed upbeat about AWS, repeatedly pointing to its run rate and revenue growth. He said the business would benefit from users adopting AI, which he called "the biggest transformation in our lifetime."

Jassy said broader use of AI is driving core capabilities such as reinforcement learning, post training and tool calling, and he highlighted the company's Graviton family of processors. The amount of capacity added each quarter will vary, he said, but projecting growth of over 40% in each of 2027 and 2028 at this scale is "pretty significant." He called the prospect of a trillion-dollar revenue business within five to 10 years "an extraordinary, unusual opportunity."