Amazon posts negative free cash flow of $42.4 billion on AI spending
Amazon shares dropped over six percent after reporting weak quarterly results.
The short version
- The online retail and cloud giant posted a massive cash outflow of $42.4 billion.
- Heavy investments in artificial intelligence infrastructure drove the spending surge.
Check your statements if you hold retail stocks. Amazon just posted a negative free cash flow of $42.4 billion, sending its shares plunging more than six percent in extended trading after a disappointing third-quarter report, according to CNBC. CEO Andy Jassy, who runs Amazon, told investors that the massive cash outflow reflects a swelling wave of artificial intelligence investments that ate heavily into the company's reserves.
Capital expenditures reached $77.3 billion during the quarter, skyrocketing past the $35.1 billion recorded one year earlier. The company held steady on its capital expenditure forecast for 2026, saying it expects total spending to reach $220 billion this year. Jassy said on a conference call that Amazon expects to spend meaningfully more in 2027 while defending the aggressive infrastructure push.
The shortfall was driven primarily by an increase in purchases of property and equipment for data centers and AI chips. Meanwhile, sales in Amazon's cloud computing segment soared 39 percent year over year to $45.98 billion, beating analyst estimates. Jassy predicted that the cloud unit will become a $1 trillion revenue business in the next five to 10 years.
Results were softer in retail and advertising, where online sales gained just two percent to $68.47 billion and missed projections. The massive spending bill shows just how much capital the tech giants are burning to chase the artificial intelligence boom.
Photo: SounderBruce, CC BY-SA 2.0, via Wikimedia Commons
