Amazon reported a free cash flow drop to minus $42.4bn over the past year, driven mainly by a surge in AI-related spending, according to its Q3 earnings. A year earlier, free cash flow was a positive $14.8bn. The company’s revenue rose 12% to $201.9bn, with operating income up to $28.1bn and a record operating margin of 13.9%. Purchases of property and equipment reached $94.8bn over 12 months, mostly for AI. Amazon spent $77.3bn on property and equipment in Q3 alone, compared to $35.1bn a year earlier.
Amazon Web Services (AWS) revenue rose 39% to $46bn, with operating income up to $17.8bn. AWS now has an annual revenue run rate of $184bn and a backlog of $578bn, according to CEO Andy Jassy. He said AWS revenue is expected to grow more than 40% in 2027 and 2028, and Amazon will start selling its Trainium AI chips outside AWS late in 2027. Amazon raised $48.1bn in long-term debt in the quarter and can now borrow up to $80bn against AI hardware purchases.
For regulated-industry leaders, Amazon’s scale of AI investment and cloud growth sets new benchmarks for infrastructure and competition. The company’s plans to expand AI chip sales and its large capital commitments may pressure rivals and influence technology procurement strategies.
