Amazon's AI spending pushes free cash flow to minus $42.4 billion as AWS grows 39%
Amazon's third-quarter 2026 results, published on 29 October, show AWS sales up 39% to $46.0 billion, its fastest growth in nearly five years. But free cash flow fell to an outflow of $42.4 billion over the past 12 months, from an inflow of $14.8 billion a year earlier, driven mainly by AI investment in property and equipment.
The short version
- 01Amazon's free cash flow was an outflow of $42.4 billion over the 12 months to 30 September 2026.
- 02A year earlier it was an inflow of $14.8 billion.
- 03Amazon says the swing is driven by $94.8 billion more spent on property and equipment, mainly AI.
- 04AWS sales rose 39% to $46.0 billion, a $184 billion annual run rate.
- 05Operating income was $28.1 billion, Amazon's highest operating margin ever at 13.9%.
At a glance
| Results published | 29 October 2026 |
|---|---|
| Company | Amazon |
| Free cash flow (12 months) | Outflow of $42.4 billion |
| Operating cash flow (12 months) | $168.3 billion, up 29% |
| AWS sales (Q3) | $46.0 billion, up 39% |
| Total net sales (Q3) | $201.9 billion, up 12% |
| 2026 cash capital spending | About $220 billion expected |
| Status | Confirmed |
What did Amazon report?
In its third-quarter results, Amazon said net sales rose 12% to $201.9 billion and operating income rose to $28.1 billion, with an operating margin of 13.9%, its highest ever.
AWS segment sales rose 39% to $46.0 billion, and AWS operating income was $17.8 billion. Amazon says that is a $184 billion annualised revenue run rate and AWS's fastest growth in nearly five years.
Why is Amazon's free cash flow negative?
Free cash flow is operating cash flow minus the money spent on property and equipment. Over the 12 months to 30 September 2026, Amazon's operating cash flow rose 29% to $168.3 billion, but its spending on property and equipment, net of proceeds, reached $210.7 billion.
That left a free cash flow outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier. Amazon says the swing is driven mainly by a $94.8 billion year-over-year increase in that spending, which it says primarily reflects investments in artificial intelligence.
What does Amazon say about AWS?
CEO Andy Jassy says the AI spending is paying off, and projects AWS revenue growth of over 40% in both 2027 and 2028.
Amazon also says Bedrock, its AI service, saw Fortune 500 customers spend nearly 7 times more year over year, and that total token volume grew nearly 17 times.
Our AWS investment in functionality and infrastructure is working
Andy Jassy, Amazon CEO
How much will Amazon spend in 2026?
Amazon says it still expects 2026 cash capital expenditures of approximately $220 billion.
Why does it matter?
Amazon spent more on equipment than its operations brought in. It is betting that demand for AI computing will grow fast enough to pay that back, and its Q3 numbers show AWS growth speeding up.
What's next?
Amazon guides to about $220 billion of capital spending for 2026. Watch whether AWS growth stays above 40%, as Jassy projects.
Questions people ask
What was Amazon's free cash flow?
An outflow of $42.4 billion over the 12 months to 30 September 2026, compared with an inflow of $14.8 billion a year earlier.
Is the $42.4 billion a loss?
No. It is free cash flow, operating cash flow minus equipment spending. Net income in Q3 was $20.7 billion.
How fast did AWS grow?
Sales rose 39% to $46.0 billion, its fastest growth in nearly five years.
What caused the cash outflow?
Amazon says a $94.8 billion rise in spending on property and equipment, mainly for AI.
How much will Amazon spend in 2026?
About $220 billion in cash capital expenditures.
Sources
- PrimaryAmazon: Third Quarter 2026 results, SEC filing (29 Oct 2026)
- PrimaryAmazon: Q3 2026 earnings report page
Why "Confirmed"? We label a story "Confirmed" when the company or government announced it itself. Spotted an error? Email hello@openloopnews.com and we will correct it.
