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Big Tech’s AI Spending Boom Squeezes Free Cash Flow

The five biggest tech firms spent $556.9 billion on AI projects in nine months, while free cash flow turned negative and buybacks fell sharply.

  • 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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The Washington Post broke the news in Washington, United States on Tuesday, October 27, 2026.
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