Amazon’s AI Spending Pushes Free Cash Flow Deep into Negative Territory
Amazon’s third-quarter results showed accelerating AWS growth alongside rising pressure from AI infrastructure spending. Revenue rose 12% year on year to $201.94 billion, below analyst expectations. Diluted earnings per share fell to $1.89 from $1.95 a year earlier, also missing forecasts. Net income declined 2%, partly because the prior-year period included a $9.5 billion pre-tax gain related to Anthropic.
AWS revenue grew 39.3% to $45.98 billion, its fastest rate in nearly five years. AWS backlog reached $578 billion, while operating margin eased slightly from the previous quarter to 38.7%. Amazon CEO Andy Jassy said demand for computing capacity remained strong and forecast AWS revenue growth above 40% in 2027 and 2028.
The expansion is costly. Amazon maintained its plan for about $220 billion in 2026 capital expenditure. Cash purchases of property and equipment reached $77.26 billion in the quarter. Over the past 12 months, free cash flow fell to negative $42.36 billion, compared with positive $14.79 billion a year earlier, as capital spending outpaced operating cash-flow growth.
Amazon forecast fourth-quarter revenue of $240 billion to $247 billion, with the midpoint slightly below analysts’ expectations. Its shares fell more than 7% at one point in after-hours trading. Investors are weighing whether AWS and AI demand can turn the company’s heavy infrastructure investment into sustained revenue, profits and cash flow.
Neutral
The report has no direct cryptocurrency catalyst: it does not concern crypto assets, regulation, or blockchain adoption. Its immediate market relevance is mainly through broader risk sentiment. Amazon shares fell after its revenue outlook missed expectations and free cash flow turned sharply negative, reinforcing investor concern that large technology companies may need substantial spending before AI investments deliver returns. That could weigh indirectly on technology-linked tokens and other risk-sensitive crypto assets if traders reduce exposure to growth stocks and AI narratives.
However, AWS growth of 39.3%, a $578 billion backlog, and management’s strong demand outlook offer a counterpoint. The results do not establish a clear change in crypto fundamentals or liquidity conditions, so a neutral overall classification is appropriate. In the short term, traders may watch moves in major tech stocks, Treasury yields, and broader risk appetite for spillover into crypto; volatility could rise if AI-capex concerns spread across the tech sector. Over the longer term, continued cloud and AI investment could support demand for computing infrastructure, but any crypto-market effect is indirect and depends on whether this spending translates into durable earnings and confidence. Past technology earnings disappointments have sometimes triggered brief risk-off moves across markets, but they have not reliably determined crypto’s direction, which remains more sensitive to its own liquidity, regulatory, and network-specific developments.