According to Woofun AI, in its October 29, 2026 earnings flash note on Amazon.com (AMZN.US), Goldman Sachs (GS.US) identified the AWS growth shortfall as its core observation point. Although the cloud business performed strongly, the actual growth rate of 39.3% failed to clear the buyer-side threshold of above 42% growth, causing an initially negative market reaction as investors were disappointed by the gap between high expectations and strong growth.
An in-depth analysis of the cloud business shows that AWS generated revenue of $45.98 billion in the third quarter, a figure that exceeded Goldman Sachs' own forecast and the sell-side consensus estimate but still fell below the above-42% growth level that buy-side investors repeatedly emphasized before the earnings release. The difference between these two sets of expectations became the key clue for understanding short-term market sentiment.
Goldman Sachs noted that the company's forward commentary mentioned an AWS growth target of roughly 40% for 2027 and 2028, indicating that the market's focus has shifted from whether demand exists to the efficiency of serving new computing capacity demand. According to data compiled by Woofun AI, Goldman Sachs listed computing power supply as a key point for the earnings call, because customer demand must be met by available computing capacity, and the pace at which new capacity comes online directly affects the speed of revenue recognition. Demand visibility, construction progress, and revenue release must work closely together along the same growth path.
In addition, Goldman Sachs is closely watching the strategic positioning of Bedrock and Trainium. The former is Amazon's generative AI services platform, while the latter is its in-house AI training chip. These two initiatives are intended to capture industry AI spending through services and infrastructure and to respond to evolving market demand.
On overall financial performance, Amazon's third-quarter total revenue was $201.94 billion, up 12.1% year over year, slightly above Goldman Sachs' forecast of $201.51 billion but below the market consensus of $202.35 billion. Sales scale was close to prior expectations, and the operating highlights were mainly concentrated on the profit side.
Under U.S. generally accepted accounting principles, operating income reached $28.1 billion, not only above the market expectation of $26.16 billion but also above the upper end of the company's previous guidance. The overall operating margin was 13.9%, demonstrating strong profitability against the backdrop of steady revenue growth.
By segment, AWS operating income was $17.77 billion, with a margin of 38.7%, contributing significantly to overall profit; North America operating income was $8.72 billion, with a margin of 7.7%; and international operating income was $1.58 billion, with a margin of 3.7%. Goldman Sachs identified cloud, advertising, third-party merchant services, and subscriptions as directions for high-margin business expansion, and their growth rates directly affect the group's ability to convert sales growth into profit.
Online stores generated third-quarter revenue of $68.47 billion, up 1.6% year over year, while third-party merchant services revenue was $46.49 billion, up 9.4% year over year. The difference in growth rates highlights the different emphasis on platform services and merchandise retail within the group. Subscription services revenue was $14.01 billion, up 11.4% year over year; advertising services revenue was $19.64 billion, up 10.9% year over year. These businesses are closely tied to consumers, merchants, and platform traffic, affecting both the revenue mix and the stability of group profitability.
Goldman Sachs listed consumer health as an earnings call focus, believing that consumer demand will feed through to merchandise sales, merchant operations, and advertising spending. It is also monitoring changes in agentic shopping and exploring how AI agents may affect commercial activity and the evolution of how consumers find and purchase goods.
On forward guidance and investment recommendations, Amazon reiterated capital expenditure of about $220 billion for 2026. Goldman Sachs identified future capital needs, spending arrangements, and financing methods for computing power expansion as important items to track. Continued construction provides conditions for growth but also places higher demands on cash investment and operating returns.
Fourth-quarter total revenue guidance was $240 billion to $247 billion, including a 0.6 percentage point negative impact from foreign exchange. The market consensus of $244.4 billion falls within the guidance range, indicating that the company's revenue range broadly covers prior market expectations. Operating income guidance was $28.5 billion to $33.5 billion, with market consensus at $32.9 billion. Goldman Sachs noted that the upper end of the range is slightly above consensus, but the midpoint implies an operating margin of 12.7%, below the market expectation of 13.5%. The flexibility of the profit guidance needs to be understood in light of continued investment.
Goldman Sachs maintained its Buy rating and set a 12-month target price of $375, while listing intensifying competition, high-margin business expansion falling short of expectations, and new business investment suppressing margins as the main risks. The company needs to maintain cloud business competitiveness while ensuring that advertising, subscriptions, and merchant services continue to grow. Group profit depends on the combined contribution of multiple operating results.
The divergence in this earnings report centers on the gap between strong growth and high expectations. Computing power construction determines the upper limit of AWS growth, while retail and advertising determine the room for profit retention. Amazon's next focus is to effectively connect computing power construction, business growth, and profitable returns, delivering results on both fronts at the same time.
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