Amazon Reports on 29 October: AWS Growth, Not a Gain-Inflated EPS, Decides the Quarter

Amazon reports third-quarter results on Thursday, 29 October, after the market close. The consensus asks for almost no earnings growth on double-digit sales growth, and the last two quarters showed why the headline EPS figure is a poor guide to this company right now. The number that decides how the quarter reads is the growth rate of Amazon Web Services, set against the money being spent to produce it.

What the street expects

Analysts expect earnings per share of $1.96 on revenue of $202.2 billion. Against the same quarter of 2025, that is a 12.2% rise in revenue but EPS that is essentially flat.

Change is simple arithmetic on the consensus and the reported figure.

The flat EPS line is less of a warning than it looks. Amazon's reported earnings have recently been carried by large non-operating items, which makes quarter-to-quarter EPS comparisons unreliable.

The track record

Amazon has beaten revenue consensus in each of the last four quarters and EPS in three of them:

• Q3 2025: EPS $1.95 vs $1.57 expected; revenue $180.2bn vs $177.9bn.
• Q4 2025: EPS $1.95 vs $1.97 expected (a narrow miss); revenue $213.4bn vs $211.5bn.
• Q1 2026: EPS $2.78 vs $1.63 expected; revenue $181.5bn vs $177.3bn.
• Q2 2026: EPS $5.75 vs $1.82 expected; revenue $200.6bn vs $197.0bn.

The size of the recent EPS beats needs context. In Q2 2026, operating income was $27.5 billion while pre-tax income was $80.9 billion: about $53.4 billion came from other, non-operating income. In Q1 2026 that line was about $16.0 billion. These items lifted EPS far above consensus but say little about the underlying business. Revenue beats have been steadier and smaller, between 0.9% and 2.4% above consensus (simple arithmetic).

Operating margin is the cleaner measure, and it has moved up: 9.7% in Q3 2025, 11.7% in Q4 2025, 13.1% in Q1 2026 and 13.7% in Q2 2026 (operating income divided by revenue, from the filed statements).

The line that decides the quarter

AWS revenue growth has accelerated for four consecutive quarters on the filed segment data:

Growth rates computed from the reported segment revenue.

In Q2, AWS was 21.1% of group revenue. That acceleration is the main reason the operating margin has expanded, and it is what the market is paying for. On a year-ago base of $33.0 billion, AWS would need about $45.2 billion of revenue to match Q2's 36.8% growth rate (simple arithmetic). A step back towards the 20s would be read as the AI build-out delivering less than hoped.

The other half of the equation is spending. On a trailing twelve-month basis, capital expenditure per share ($16.09) exceeded operating cash flow per share ($15.01), leaving free cash flow slightly negative. Recent coverage frames the report the same way: CNBC carried a strategist naming Amazon and Microsoft as the key reports for gauging returns on AI investment, and a 24/7 Wall St. piece pointed to a $496 billion AWS backlog and how fast it converts into revenue.

So the test is a ratio, not a single number. Continued AWS acceleration justifies spending that currently consumes all operating cash flow. A slowdown, with spending still rising, would put pressure on the case. Advertising, which grew 26.2% year on year in Q2 to $19.8 billion, is the secondary line to watch.

Valuation and the Maz Rating

At $248, Amazon has a market value of about $2.68 trillion and trades at 19.7 times trailing earnings. That multiple is flattered by the non-operating gains; on an EBITDA basis, enterprise value is about 11.1 times trailing EBITDA. The shares are down from a 52-week high of $287.20 and sit below their 50-day average of $255.65.

The analyst consensus price target is $328.90 (median $325), with a range from $200 to $390.

Amazon carries a Maz Rating of 4.73 out of 5 (Strong Buy). The factor scores explain where the case lies: Profitability 4.85, Growth 4.75 and Financial Health 4.20 are strong, Momentum is 3.85, and Valuation is the weak point at 2.08. In other words, the rating rests on business quality and growth rather than on the stock being cheap, which puts more weight on whether AWS keeps delivering.

Bottom line

Headline EPS will probably be distorted again by items outside operations, and a flat consensus makes a beat easy to manufacture. The read on the quarter should come from AWS: whether growth holds above the 36.8% posted in Q2, and whether management's comments on capital spending suggest that cash generation catches up with investment. Operating margin above the 13.7% of Q2 would confirm the trend; AWS deceleration would matter more than any EPS figure.

This is a preview based on published consensus and filed accounts, not investment advice.