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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143 Articles
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Amazon posts negative free cash flow of $42.4 billion, holds 2026 capex unchanged
Amazon shares fell over 6% after reporting negative free cash flow of $42.4 billion for the trailing twelve months, driven by surging AI infrastructure investments that exceeded capital expenditure guidance.
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