Amazon Just Burned $42 Billion in Cash Chasing AI Growth. Is Wall Street Ignoring the Risk?
AWS just posted its fastest growth in almost five years, but what is it spending to make that happen?
Amazon burned through $42 billion in cash over the past year as it poured resources into AI growth, sparking concerns among Wall Street investors. The company's latest earnings report revealed that its property and equipment spending surged to $77.3 billion in Q3, more than double the $35.1 billion spent a year earlier. This investment fueled AWS's cloud business, which delivered its best growth in almost five years at 39% year-over-year.
However, Amazon's sales and earnings per share (EPS) fell short of Wall Street expectations, with sales rising 12% to $201.9 billion and EPS at $1.89, below the $1.95 target.
The EPS shortfall was partly due to a strong Q3 last year when the company recorded a $9.5 billion pretax gain from its stake in Anthropic, the maker of Claude. Still, Amazon spent about $220 billion on capital expenditures in 2026, indicating continued outflows. The company raised $48.1 billion in long-term debt during the quarter, with total long-term debt rising from $65.6 billion at the end of 2025 to $173.1 billion.
While AWS was the star of the show, generating $46.0 billion in revenue and $17.8 billion in operating profit, the company's overall free cash flow (FCF) turned negative at $42.4 billion over the past year, down from a $14.8 billion gain the previous year. Despite these challenges, AWS CEO Andy Jassy anticipates more than 40% growth for AWS in 2027 and 2028, as capacity remains largely sold out.
While other tech giants like Microsoft and Alphabet are also investing heavily in cloud services, Amazon's reliance on AI-driven demand from companies like Anthropic and OpenAI remains a significant risk.
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