Amazon Ad Revenue Growth Drops to 11% in Third Quarter

Amazon reported a sharp deceleration in its advertising business during the third quarter, with year over year growth falling to 11%.

The slowdown contributed to a quarterly performance that missed consensus expectations for both revenue and earnings. The company posted net sales of $201.9 billion and diluted earnings per share of $1.89. Analysts tracked by LSEG had projected revenue of $202.31 billion and earnings per share of $1.96. Following the release, Amazon stock declined 4% in after hours trading.

Advertising revenue growth had remained steady around 22% for four consecutive quarters before spiking to 26% in the second quarter of 2026. Management cited two primary reasons for the third quarter dip. The company held its Prime Day sale in the second quarter for most large markets, which shifted spending earlier in the year. Unfavorable foreign exchange rates also weighed on the numbers. Amazon expects advertising growth to recover to the high teens in the fourth quarter.

Regional results showed North American revenue rising 6% to $112.9 billion. International revenue increased 5% to $43.1 billion. The cloud division, Amazon Web Services, saw revenue climb 39% to $46 billion. That marked the segment's fastest growth rate in nearly five years, exceeding the 20% growth recorded in the same period last year by almost 20 percentage points.

Andy Jassy, Amazon's president and CEO, stated in prepared remarks that investments in AWS functionality and infrastructure are yielding results. He noted a revenue run rate of $184 billion and projected growth rates above 40% for both 2027 and 2028. Jassy described the company's newer ventures, including Grocery, Pharmacy, Amazon Leo, and Zoox, as progressing encouragingly.

On the earnings call, Jassy emphasized that AI adoption would benefit the cloud business. He referred to AI as the biggest transformation in his lifetime and highlighted the Graviton family of processors. He called the prospect of achieving trillion dollar revenue within five to ten years an extraordinary and unusual opportunity. Amazon projects fourth quarter revenue growth between 12% and 16%, placing total revenue between $240 billion and $247 billion.