Amazon reported third quarter results on October 29, and the numbers that matter most to sellers were not the AWS headlines. Advertising came in at $19.6 billion, up 11%. Third-party seller services came in at $46.5 billion, up 9%. And Amazon told Wall Street to expect ad revenue to grow in the high teens in Q4.
That last line is the one I would pay attention to heading into Black Friday and Cyber Monday.
What Amazon reported
These are straight from Amazon's Q3 2026 release and earnings call:
- Total net sales were $201.9 billion, up 12%. Amazon said growth would have been about 400 basis points higher if Prime Day had not moved into Q2 for most large countries this year.
- Advertising services revenue was $19.6 billion, up 11%, or 12% excluding currency. A year ago, ads were growing 22%.
- Third-party seller services revenue, which includes commissions and fulfillment and shipping fees, was $46.5 billion, up 9%, or 10% excluding currency.
- Online stores revenue, Amazon's own first-party retail, grew just 2% to $68.5 billion.
- Third-party sellers accounted for 61% of paid units, the same share as last quarter.
- Q4 guidance calls for net sales of $240 billion to $247 billion and ad revenue growth "in the high teens."
Why ads slowed, according to Amazon
Andy Jassy gave three reasons on the call. Prime Day moved into Q2 for most countries, which he said was an 850 basis point sequential hit to Q3 ad growth. Q2 also had the first season of NBA on Prime, and Q3 had no NBA. And Amazon started lapping last year's change to its search engine marketing programs, which had pushed more traffic to Amazon search pages and boosted ad growth starting in Q3 2025.
He also raised the question a lot of people have been asking: are outside AI shopping agents hurting Amazon Ads? His answer was "no," because few customers are shopping that way yet.
Why it matters for sellers
My read: the Q3 slowdown was mostly calendar, and Amazon is telling you the ad machine is about to run hot again. Q4 2025 ad revenue was $21.3 billion. High-teens growth on that puts Q4 2026 somewhere around $25 billion by my math. That money comes from advertisers, and a big share of it comes from sellers and brands bidding against each other in the same holiday weeks.
A few other things in the release point the same direction:
- Amazon is pushing advertisers toward AI-run buying. It launched Amazon Ads Agent and Full-Funnel Campaigns for all U.S. advertisers, where you set budget and duration and Amazon's AI plans and optimizes sponsored ads, display, video, and streaming TV together.
- Amazon's own shopping assistant is growing fast. Alexa for Shopping was used by more than 400 million customers in the last 12 months, interactions were up 570%, and Jassy said U.S. customers using it spend 50% more per order.
- Fulfillment costs are not getting cheaper. CFO Brian Olsavsky said fuel and line haul costs are higher in Q4 than in Q3, and that the FBA fuel surcharge Amazon added earlier this year recovers some, but not all, of those costs.
Who it affects most
- Brands that lean on Sponsored Products to carry Q4, because more ad dollars chasing the same holiday traffic usually means tougher auctions.
- Sellers with thin margins on FBA items, where higher ad costs and fuel-related fees can stack up fast.
- Advertisers deciding whether to hand budgets to Amazon's AI campaign tools during the most expensive weeks of the year.
What I would do now
- Set your Q4 ad budget by SKU margin, not by last year's spend. Know the break-even ACoS on every hero product before Black Friday week.
- Protect branded search. Defend your own brand terms early so competitors are not buying your shoppers cheaply.
- Test Amazon's AI campaign tools on a slice of budget, not all of it. Compare results against your existing campaigns before scaling.
- Make your listings answer real questions. If more shoppers are asking Alexa for Shopping about your product, clear titles, complete attributes, and good Q&A content matter more.
- Recheck your FBA fee math. Factor current fulfillment fees and the fuel surcharge into holiday pricing before you commit to deep discounts.
The bottom line
Confirmed: Amazon Ads did $19.6 billion in Q3, seller services did $46.5 billion, sellers still move 61% of units, and Amazon expects high-teens ad growth in Q4. My take: plan for a more crowded, more expensive ad auction this holiday, and make every dollar earn its place.
Worried Q4 ad costs are going to eat your margin? Talk to a strategist and we will pressure-test your holiday ad plan, budgets, and pricing before the biggest weeks of the year.