Amazon negative free cash flow hits $42.4 billion; 2026 capex plan unchanged

Capex swelled again, shares fell more than 6% after hours, and Q4 revenue guidance landed below the Street’s midpoint.

Amazon kept its 2026 capital spending plan unchanged and reported Amazon negative free cash flow of $42.4 billion on a trailing twelve‑month basis, after posting third‑quarter earnings and revenue below Wall Street’s estimates, the report said. Shares fell more than 6% in extended trading on Thursday.

EPS came in at $1.89 versus $1.96 expected, and revenue was $201.94 billion versus $202.31 billion expected, according to LSEG. Third‑quarter net income was $20.69 billion, or $1.89 per share, compared with $21.19 billion, or $1.95 per share, a year ago. The company said the year‑over‑year decrease was driven primarily by a $9.5 billion pre‑tax gain from its investment in Anthropic recorded in the 2025 third quarter.

Capex surge drives the cash drain

The report links the cash outflow primarily to higher purchases of property and equipment tied to AI. Capital expenditures reached $77.3 billion in the quarter, up from $35.1 billion a year earlier and well above the $58.7 billion analysts expected, according to FactSet. That is about 2.2 times the prior‑year level. Free cash flow, which reflects operating cash generation after investment outlays, falls when spending on long‑lived assets rises.

Negative free cash flow was the second consecutive quarterly print, following a $7.6 billion outflow in the prior quarter, the report said. Management framed the ramp as deliberate: CEO Andy Jassy told investors the company expects to “spend meaningfully more in 2027,” and said Amazon has a “clear line of sight to attractive financial returns.”

Guidance and segment mix

Amazon guided fourth‑quarter revenue to $240 billion to $247 billion; the midpoint was below Wall Street’s $244.5 billion, according to LSEG. While the retail and advertising units lagged consensus, AWS accelerated.

AWS revenue rose 39% year over year to $45.98 billion, topping the $45.29 billion consensus, StreetAccount data showed. Advertising revenue rose 11% year over year to $19.64 billion, missing the $20.82 billion estimate, and online sales were $68.47 billion versus a $69.68 billion projection, also per StreetAccount. The report said both units were helped less by promotions after Amazon pulled some Prime Day events into the second quarter to avoid the July World Cup window.

Jassy said AWS growth should run above 40% next year and in 2028, and added that Amazon plans to make its Trainium chips available externally “late in 2027.”

Source: CNBC.
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