- Amazon reported net sales of $201.9 billion and a profit of $1.95 per share, compared to net sales of 202.26 billion and a profit of $1.96 per share expected by Wall Street analysts, per Yahoo Finance.
- The tech giant also reported softer than expected net sales guidance of $240 billion to $247 billion in the fourth quarter
- Shares fell more than 5% in after-hours trading on Thursday
Prime Video now has a revenue run rate in the “tens of billions” of dollars, Amazon CEO Andy Jassy said on Thursday. He also reiterated that the streaming service is “profitable in its own right.”
The disclosure comes as third-quarter net sales in the tech giant’s subscription segment, which includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book and other non-Amazon Web Services subscription services, rose 12% to $14 billion.
Meanwhile, advertising services revenue, which includes sales to sellers, vendors, publishers, authors and others through programs such as sponsored ads, display and video advertising, grew 12% to $19.64 billion, though the segment’s growth was pressured by “timing anomalies” primarily related to Prime Day, the NBA and changes in its search engine marketing programs.
Amazon does not break out Prime Video’s financials or subscribers separately. However, the service’s ad tier reaches over 315 million monthly active users globally, including more than 130 million in the United States alone.
Other countries where the ad tier is available include Australia, Austria, Brazil, Canada, France, Germany, India, Italy, Japan, Mexico, New Zealand, The Netherlands, Spain, Sweden and the U.K. Prime Video users can pay a fee of $4.99 per month to upgrade to an ad-free experience.
“We have momentum with hit shows like Carrie, The Summer I Turned Pretty, The Boys, Off Campus, Reacher and Fallout, and breakout movies like Project Hail Mary, along with compelling live sports including Thursday Night Football — off to its best start ever in 2026 — NBA on Prime, NASCAR, The Masters, and UEFA Champions League soccer,” Jassy told analysts on Thursday.
During the quarter, Prime Video launched its fifth season of Thursday Night Football, which grew 16% year over last year’s full-season average with an average of 17.7 million viewers through six games.
It also launched its second season of the NBA, which more than doubled last-year’s full season average with over two million U.S. viewers in its season-opening doubleheader. Additionally, “Reacher” Season 4 drew 66 million viewers in its first 28 days and Amazon MGM Studios exceeded $1.2 billion in global box office so far in 2026.
Amazon also introduced its AI-powered Ads Agent to help support advertisers with insights, answers and the ability to take action on their behalf using trillions of shopping, browsing, and streaming signals. The feature also launched full funnel campaigns for all U.S. advertisers, bringing sponsored ads, display, video, and streaming TV into a single campaign.
Starting in 2027, Prime Video will be home to the Emmys, bringing the telecast to more than 240 countries around the world. The exclusive deal, which runs through 2033, is worth around $15 million a year, an individual with knowledge previously told TheWrap.
AWS poised to become trillion dollar annual revenue business in 5 to 10 years
In addition to the update on Prime Video, Amazon Web Services was a bright spot during the quarter, growing its net sales 39% to $46 billion, the segment’s fastest growth in nearly five years, as AI compute demand continues to heat up. During the quarter, AWS signed new agreements with companies including Meta, Nvidia, OpenAI, Salesforce, Oracle, Qualcomm, Verizon and more.
The AWS business, which drives the lion’s share of revenue and profitability for Amazon, has a backlog of $578 billion, up triple digits year over year, and an $184 billion revenue run rate with projected revenue growth of over 40% in 2027 and 2028.
Jassy said the company’s core compute and storage revenue grew at their fastest rates in several years and that its operating margins on the AI side are “well ahead” of where they were on the core side of the business at a similar time of evolution. He also said that demand for AWS capacity remains “exceptionally strong” and that its inference service Bedrock accounts for well over half of the segment’s AI revenue.
Additionally, Jassy predicted that AWS could become a trillion dollar annual revenue business in the next five to 10 years.
Amazon LEO expenses to weigh on Q4
Despite Prime Video and AWS’ growth, Amazon shares fell over 5% in after-hours trading after the company missed Wall Street’s earnings expectations. It grew total net sales 12% to $201.9 billion and a posted a profit of $20.7 billion, or $1.89 per share.
It also issued softer than expected guidance for the fourth quarter, projecting net sales between $240 billion and $247 billion, or growth between 12% and 16%, due to a negative impact from foreign exchange rates. In addition, fourth-quarter operating income is expected to come in between $28.5 billion and $33.5 billion, while ad revenue growth is expected to be in the high-teens.
The fourth quarter results will also be impacted by the majority of expenses from the initial launch of Amazon’s low-Earth orbit (LEO) satellite network, which is expected to begin commercial internet service by the end of the year. Amazon’s Chief Financial Officer Brian Olsavsky said it would begin capitalizing production and launch costs in the first quarter of 2027.
Amazon continues to expect $220 billion in capital expenditures for 2026 due to higher memory costs, with the majority going towards AI and AWS. The company’s capex spending will be “meaningfully more” in 2027, with a “clear line of sight to attractive financial returns,” Jassy said.
