Amazon Sinks as AI Spending Eclipses Fastest Cloud Growth in Five Years
AWS revenue climbed 39% as Amazon’s AI buildout drove $77.3 billion in quarterly capital spending and pushed free cash flow deeply negative.
- On Thursday, October 29, 2026, Amazon shares fell nearly 7% in extended trading after the company reported massive cash burn and forecast holiday-quarter revenue of $240 billion to $247 billion, missing Wall Street estimates.
- Intensive capital requirements for artificial intelligence infrastructure drove a trailing 12-month free cash flow outflow of $42.4 billion, with capital expenditure of $75.9 billion during the quarter—roughly $20 billion above estimates.
- Revenue at Amazon Web Services rose 39% to $46 billion, missing the 43% expectation, while advertising sales increased 12% to $19.6 billion—the first time advertising missed estimates in seven quarters.
- Analysts from Deutsche Bank and BMO maintained bullish price targets of $325 and $390 respectively, citing confidence in Amazon's accelerating cloud growth and long-term AI positioning despite immediate market reaction.
- Chief Executive Officer Andy Jassy told analysts he expects capital expenditures to be "meaningfully more" in 2027 compared with 2026, while management underwrite 40%+ AWS growth through 2028, focusing on Agentic Commerce initiatives.
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Amazon Q3 earnings: customers ‘gobbling’ up AI capacity, Jassy says
Amazon’s free cash flow fell to minus $42.4bn over the 12 months to September. Spending on AI drove most of the drop, the company said on Thursday. A year earlier it was a positive $14.8bn. The Amazon Q3 earnings showed revenue up 12% to $201.9bn and operating income up to $28.1bn, from $17.4bn a year […] This story continues at The Next Web
Amazon’s AI Spending Spooks Investors
Amazon reporting higher-than-expected capex and its slowest e-commerce growth in three years — adding to concerns over Big Tech’s massive AI spending. Citizens Equity Research analyst Andrew Boone weighs in on Bloomberg Open Interest. (Source: Bloomberg)
AWS grew 39% and Amazon had its biggest operating margin, but the action fell more than 7% after the report for spending on artificial intelligence.
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