Amazon’s profits keep rising, but AI spending has pushed its free cash flow to minus $42 billion

Amazon’s third-quarter results tell two stories at once. On paper, the company is more profitable than ever. In cash, it is spending far more than it brings in, because of the scale of its bet on artificial intelligence.

Sales rose 12% to $201.9 billion in July to September, just short of the $202.3 billion analysts expected. Operating income jumped to $28.1 billion from $17.4 billion a year earlier. Net income was $20.7 billion, or $1.89 a share, slightly lower than a year ago, when the result was lifted by a $9.5 billion gain on Amazon’s stake in Anthropic. Analysts had expected $1.96 a share.

AWS is the bright spot

Amazon Web Services, its cloud business, grew 39% to $46.0 billion, its fastest pace in years, and earned $17.8 billion of operating profit, more than 60% of the company’s total. Chief executive Andy Jassy said AWS revenue growth is expected to be “over 40% both in 2027 and in 2028.” The shopping business grew more slowly: North America sales rose 6% and international sales 5%.

Where the cash went

The problem is the bill for all that growth. Amazon spent $77.3 billion on property and equipment in the third quarter alone, more than double the $35.1 billion of a year earlier. Most of it went on data centers, chips and servers for AI.

Billions of dollars

• Operating income
• Spending on property and equipment

Show the numbers

	Operating income	Spending on property and equipment
Q3 2025	$17.4bn	$35.1bn
Q3 2026	$28.1bn	$77.3bn

Source: Amazon third-quarter 2026 earnings release

Over the past 12 months Amazon’s operations generated a healthy $168.3 billion of cash, up 29%. But it spent $210.7 billion on property and equipment over the same period. The result is free cash flow of minus $42.4 billion, compared with plus $14.8 billion a year earlier. That is the deepest on record for Amazon, almost twice the previous low of minus $23.5 billion in mid-2022.

Billions of dollars, at the end of each quarter

Show the numbers

	Free cash flow
Q3 2025	$14.8bn
Q4 2025	$11.2bn
Q1 2026	$1.2bn
Q2 2026	−$7.6bn
Q3 2026	−$42.4bn

Source: Amazon quarterly earnings releases

How profit and cash can point in opposite directions

Profit and cash flow measure different things. When Amazon buys a server, the cash leaves immediately, but the cost only reaches the income statement slowly, as depreciation spread over several years. So during a building spree, reported profits can look strong while the bank balance shrinks. The catch is that the depreciation arrives later, and it will weigh on profits for years unless revenue from the new data centers keeps growing fast.

Amazon is not alone. Alphabet reported negative free cash flow of $9.1 billion for its quarter on Wednesday, and Microsoft’s free cash flow fell 27% from a year earlier. Together with Meta, the big tech companies are on course to spend about $735 billion this year, with a growing share paid for with borrowed money. Amazon raised about $53 billion in bonds earlier this year.

What investors are weighing

Amazon kept its plan to spend about $220 billion on capital projects this year and expects fourth-quarter sales of $240 billion to $247 billion, a forecast analysts saw as a little soft. The shares, which had already closed down 4.25% at $243.79, fell more than 5% further in after-hours trading.

The question for investors is not whether Amazon is profitable; it clearly is. It is whether the AI spending will earn enough to justify the cash it consumes today. AWS growth of nearly 40% suggests demand is real. Free cash flow of minus $42 billion shows how much Amazon is betting that it will last.