Amazon's AI spending turns free cash flow negative at $42.4 billion, shares fall after hours
Amazon disclosed that free cash flow for the trailing twelve months ended September 30, 2026 was negative $42.4 billion, compared with positive $14.8 billion in the same period of 2025; the company said this was mainly due to a $94.8 billion increase in purchases of property and equipment related to AI investments. Amazon expects cash capital expenditure of $220 billion for 2026, and AWS Chief Financial Officer John Felton said the order backlog as of the second quarter was close to $500 billion. In the earnings report, the advertising business's year-over-year growth rate fell to 12%, compared with 26% in the previous quarter.
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The earnings data shows the direct impact of AI infrastructure investment on cash flow, which can be understood alongside capital expenditure and order backlog to grasp the source of market concerns.
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Amazon disclosed on Thursday that free cash flow for the trailing 12 months ended September 30, 2026 was negative $42.4 billion, compared with positive $14.8 billion in the same period of 2025.
The company said the change was mainly due to a $94.8 billion increase in purchases of property and equipment related to AI investments.
Amazon expects cash capital expenditures of $220 billion in 2026.
John Felton, chief financial officer of Amazon Web Services, said in an interview earlier this month that he is "confident" about the current capital expenditure strategy, and said that as of the second quarter, the company's backlog was close to $500 billion.
Previously, Gartner analysts published a report estimating that by the end of 2030, more than $3.5 trillion in AI infrastructure investment could face impairment risk, triggering market panic.
Another data point in Thursday's earnings report that unsettled investors was the advertising business's year-over-year growth of 12%, down from 26% in the previous quarter.
BofA analyst Justin Post wrote in a research note this week: "The buzz around Muse will keep the market questioning Amazon's positioning in the intelligent agent space." news_keyword_pub,usstock,GOOG&AMZN iframe below body iframe below body General statement General statement QR code at end start QR code at end start
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