SEATTLE — Amazon reported a historic drop in cash flow in its third-quarter earnings, revealing that aggressive outlays to build out artificial intelligence infrastructure pushed its trailing 12-month cash burn beyond $42 billion.
The tech giant reported overall third-quarter net sales of $201.9 billion, an increase of 12 percent from the prior year. However, that figure fell short of Wall Street expectations, according to The Wall Street Journal. Softness in retail and advertising revenue weighed on the company, though Chief Financial Officer Brian Olsavsky explained that the shift of Prime Day into the second quarter this year dampened year-over-year comparisons.
Surging Capital Costs and Mounting Debt
Amazon’s free cash flow sank to an outflow of more than $42 billion over the 12-month period ending in September, according to figures reported by Yahoo Finance and Gizmodo. The total nearly doubled the company\’s previous cash drain record of approximately $23 billion, which occurred in 2022 following an aggressive warehouse network build-out.
A massive acceleration in infrastructure spending drove the deficit. Amazon poured roughly $77 billion into property and equipment during the third quarter alone, more than doubling its capital expenditures from the same period a year earlier. Because operating cash flow came in at about $42 billion for the quarter, the gap left a quarterly deficit of roughly $33 billion, Yahoo Finance calculated.
To fund the aggressive build-out, Amazon increased its borrowing. The company’s long-term debt jumped to approximately $173 billion at the end of September, compared with roughly $66 billion at the conclusion of 2025. Over the same timeframe, cash reserves declined from roughly $87 billion to $56 billion. The rising debt load caught the attention of credit markets, with Bloomberg data showing the cost to insure Amazon debt using five-year credit default swaps climbed roughly 50 percent since early August.
Cloud Computing Delivers Rapid Expansion
Despite the cash deficit, Amazon Web Services delivered faster growth than expected. Cloud unit revenue jumped 39 percent year over year to $45.98 billion, topping the $45.29 billion consensus estimate compiled by StreetAccount, CNBC reported. Operating income for AWS climbed 55 percent to $17.77 billion.
AWS now represents nearly 23 percent of Amazon’s total revenue, marking an all-time high for the segment. During the quarter, the cloud division acquired data analysis firm DuckLabs, forged agreements with OpenAI and Meta, and expanded its inventory of Nvidia graphic processing units.
Amazon Chief Executive Andy Jassy mounted a defense of the heavy investments on an analyst conference call. He projected that AWS could achieve annual growth above 40 percent in both 2027 and 2028, with the potential to reach $1 trillion in revenue over the next five to 10 years. Jassy also announced that Amazon intends to make its proprietary Trainium AI processors available outside its own cloud environment late next year.
Big Tech Reckoning Over AI Outlays
The results arrived during a volatile week for major technology firms spending heavily on data centers and advanced chips. Alphabet shares fell 12 percent on Thursday after reporting a negative free cash flow of $9.07 billion, while Meta shares dropped following a reported negative free cash flow of $2.12 billion, Gizmodo reported. Among the four major cloud providers, only Microsoft managed positive free cash flow.
Amazon stock dropped about four percent during regular Thursday trading and slipped roughly seven percent further in extended sessions following the earnings release. Amazon leaders confirmed that capital expenditures will reach approximately $220 billion for the full year, with plans to spend substantially more in 2027.
