Amazon cash flow turns negative as AI spending rises
AWS revenue increased 39% to US$46 billion, while Amazon said it expects capital spending to rise further in 2027.
Amazon reported negative free cash flow of US$42.4 billion for the 12 months through September, compared with positive US$14.8 billion a year earlier. The company attributed most of the decline to spending on artificial intelligence and said it expects to spend more in 2027.
Third-quarter revenue increased 12% to US$201.9 billion. Operating income reached US$28.1 billion, compared with US$17.4 billion a year earlier, and the operating margin hit a company record of 13.9%. Amazon shares dropped as much as 7% during extended trading, Reuters reported.
Property and equipment spending totaled US$77.3 billion in the quarter, versus US$35.1 billion a year earlier. Amazon maintained its annual cash capital spending forecast of about US$220 billion. It also raised US$48.1 billion in long-term debt during the quarter, and a subsequent filing showed borrowing capacity of up to US$80 billion against AI hardware purchases.
Amazon Web Services posted revenue of US$46 billion, an increase of 39%, while operating income rose to US$17.8 billion from US$11.4 billion. Jassy said the cloud business had a US$184 billion annual revenue run rate and a US$578 billion backlog.
Jassy forecast AWS revenue growth above 40% in both 2027 and 2028. He also said Amazon plans to begin selling Trainium AI chips outside AWS late in 2027.
For the holiday quarter, Amazon forecast revenue between US$240 billion and US$247 billion, with operating income between US$28.5 billion and US$33.5 billion.
