> ## Content Index > Fetch the complete content index at: https://www.implicator.ai/llms.txt > Use this file to discover other available public pages before exploring further. # Amazon's AI Build-Out Drains $42.4 Billion of Cash - URL: https://www.implicator.ai/amazon-spent-77b-property-equipment-q3-leading-free-cash/ - Published: 2026-10-29T22:48:56.000Z - Updated: 2026-10-29T22:48:56.000Z - Description: Capital expenditures reached $77.3 billion in the third quarter, and Andy Jassy says Amazon expects to spend meaningfully more in 2027. - Author: Marcus Schuler - Tags: AI News, #auto Amazon's free cash flow fell to an [outflow of $42.4 billion](https://www.cnbc.com/2026/10/29/amazon-amzn-q3-earnings-report-2026.html?ref=implicator.ai) for the trailing twelve months, as heavy spending on artificial intelligence infrastructure outpaced growing operating cash flow. The company said the shortfall was primarily due to an increase in purchases of property and equipment as a result of AI investments. Shares plunged more than 6% in extended trading Thursday after the third-quarter report. What Changed - Amazon's free cash flow fell to an outflow of $42.4 billion for the trailing twelve months, the second consecutive quarter of negative free cash flow. - Capital expenditures reached $77.3 billion in the third quarter, up from $35.1 billion a year earlier and above the $58.7 billion analysts estimated. - AWS sales rose 39% to $45.98 billion, while earnings per share of $1.89 and revenue of $201.94 billion missed estimates. - Amazon held its 2026 capital expenditure forecast at $220 billion, and Andy Jassy said the company expects to spend meaningfully more in 2027. AI-generated summary, reviewed by an editor. [More on our AI guidelines](https://www.implicator.ai/about/). ## The spending Capital expenditures reached $77.3 billion during the quarter, up from $35.1 billion one year earlier. Analysts had estimated $58.7 billion, according to FactSet. Over the trailing twelve months, net purchases of property and equipment [rose $94.8 billion](https://political.org/2026/10/29/amazon-posts-negative-free-cash-flow-of-42-4-billion-as-ai-spending-surges-holds-2026-capex-at-about-220-billion/?ref=implicator.ai) year over year. Amazon's core cash generation kept growing. Operating cash flow increased 29% to $168.3 billion for the trailing twelve months, compared with $130.7 billion a year earlier. For the twelve months ended September 30, 2025, free cash flow had been an inflow of $14.8 billion. In the prior quarter, Amazon reported negative free cash flow of $7.6 billion, so this is the second consecutive quarter in the red. The $42.4 billion is a trailing-twelve-month figure, not a single-quarter one. Amazon held its 2026 capital expenditure forecast at $220 billion. In the prior quarter it had raised that forecast from $200 billion, an increase largely driven by advanced server memory costs and AI infrastructure. Chief executive Andy Jassy said on a conference call with investors that the company expects to "spend meaningfully more in 2027," and that Amazon has a "clear line of sight to attractive financial returns." FREE AI BRIEFING · WEEKDAYS Track where the AI infrastructure money goes. Get the AI stories shaping the day, with concise context from San Francisco. The briefing takes about five minutes and arrives at 4:45 a.m. Pacific, 7:45 a.m. Eastern. Email address Keep me informed Check your inbox for the confirmation link. Free. No hype. Unsubscribe anytime. ## What the money is buying Sales at Amazon Web Services rose 39% year over year to $45.98 billion, topping the consensus forecast of $45.29 billion, according to StreetAccount. That was the cloud unit's fastest growth in nearly five years, and it puts AWS at a $184 billion annualized revenue run rate. AWS operating income was $17.8 billion, compared with $11.4 billion in the third quarter of 2025\. Company-wide operating income was $28.1 billion, with a 13.9% operating margin that Amazon described as its highest ever. Jassy said the company expects AWS revenue growth rates of "over 40%" next year and in 2028\. "Our AWS investment in functionality and infrastructure is working," he added. He said Amazon's chips business "continues to grow triple-digit percentages year over year," and that the company plans to make its Trainium chips available externally "late in 2027." ## Where the quarter fell short Earnings per share came in at $1.89 against the $1.96 that analysts polled by LSEG expected. Revenue of $201.94 billion missed the $202.31 billion estimate. Online sales gained 2% year over year to $68.47 billion. Advertising revenue rose 11% to $19.64 billion, short of the $20.82 billion consensus. Both units were hit in part by Amazon's decision to pull its Prime Day sale forward into the second quarter in several countries, so as not to conflict with the FIFA World Cup in July. Know someone who'd find this useful? [✉️ Email it to a friend in one click](mailto:?subject=A%20newsletter%20I%20think%20you%27d%20like&body=This%20is%20one%20of%20maybe%20three%20newsletters%20I%20actually%20read.%20The%20rest%20just%20pile%20up%2C%20unread%2C%20judging%20me.%0A%0AAnd%20yes%2C%20this%20email%20mostly%20wrote%20itself%2C%20which%20is%20a%20little%20on%20the%20nose%20for%20an%20AI%20newsletter.%20Doesn%27t%20make%20it%20wrong.%20implicator.ai%20is%20good.%0A%0ASubscribe%20free%3A%20https%3A%2F%2Fwww.implicator.ai%2Fsubscribe%2F%3Futm%5Fsource%3Dnewsletter%26utm%5Fmedium%3Dforward%26utm%5Fcampaign%3Demail%5Fforward), or they can [subscribe free here](https://www.implicator.ai/subscribe/?utm%5Fsource=newsletter&utm%5Fmedium=forward&utm%5Fcampaign=forward%5Fto%5Fcolleague). Third-quarter net income was $20.69 billion, down from $21.19 billion a year ago. The company said the decrease was driven primarily by a $9.5 billion pre-tax gain from its investment in Anthropic, recorded in the 2025 third quarter. For the fourth quarter, Amazon expects revenue between $240 billion and $247 billion. The midpoint sits below the $244.5 billion Wall Street expected. ## The rest of the build-out Signs have begun to emerge that the hyperscalers' spending run is moderating. Earlier this week, Microsoft lowered its capex forecast for the year to $170 billion from $175 billion, while Alphabet maintained its guidance at $195 billion to $205 billion. Jassy told investors on the call that he expects AWS to become a $1 trillion revenue business in the next five to 10 years. Frequently Asked Questions Why did Amazon's free cash flow turn negative? The company said the shortfall was primarily due to an increase in purchases of property and equipment as a result of AI investments. Operating cash flow still grew 29% to $168.3 billion for the trailing twelve months. How much did Amazon spend in the third quarter? Capital expenditures reached $77.3 billion during the quarter, up from $35.1 billion one year earlier. Analysts had estimated $58.7 billion, according to FactSet. Did Amazon change its 2026 spending plan? No. Amazon held its 2026 capital expenditure forecast at $220 billion, after raising it from $200 billion in the prior quarter. Andy Jassy said the company expects to spend meaningfully more in 2027. How did AWS perform? AWS sales rose 39% year over year to $45.98 billion, the unit's fastest growth in nearly five years. AWS operating income was $17.8 billion, compared with $11.4 billion a year earlier. How did the stock react? Amazon shares plunged more than 6% in extended trading Thursday after the third-quarter report, in which earnings per share and revenue both missed analyst estimates. AI-generated summary, reviewed by an editor. [More on our AI guidelines](https://www.implicator.ai/about/). 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