Amazon shares slide as AI build-out drains cash despite AWS acceleration

Amazon’s cloud business delivered its fastest growth in nearly five years, but the result was overshadowed by the cost of building out artificial-intelligence infrastructure. Investors sent the company’s shares down as much as 7% in extended trading after Amazon paired a large free-cash-flow outflow with a holiday-quarter outlook that fell slightly short of expectations.

AWS growth reaches a five-year high

Amazon Web Services revenue rose 39% year over year to $46.0 billion in the third quarter ended September 30, according to Amazon’s earnings release. That followed 37% growth in the second quarter and exceeded the 38.2% increase analysts polled by LSEG had expected. AWS operating income rose to $17.8 billion from $11.4 billion a year earlier.

Companywide net sales increased 12% to $201.9 billion. Net income declined to $20.7 billion, or $1.89 per diluted share, from $21.2 billion, or $1.95 per share, in the year-ago quarter. Amazon said the comparison was affected mainly by a $9.5 billion pretax gain from its Anthropic investment in the prior-year period.

AI investment weighs on cash generation

Amazon reported free cash flow of negative $42.4 billion for the 12 months through September, compared with a $14.8 billion inflow in the same period a year earlier. The company attributed the change primarily to a $94.8 billion year-over-year increase in purchases of property and equipment, net of proceeds and incentives, reflecting AI investment.

Amazon continues to expect about $220 billion in 2026 capital expenditure. Chief Executive Andy Jassy told analysts spending should be “meaningfully more” next year, without giving a figure. That prospective increase is a company expectation, not a confirmed 2027 budget.

Holiday outlook trails the midpoint of estimates

Amazon forecast fourth-quarter net sales of $240.0 billion to $247.0 billion and operating income of $28.5 billion to $33.5 billion. The sales range has a midpoint of $243.5 billion, below the $244.51 billion analyst estimate cited by LSEG. Amazon expects advertising revenue growth to return to the high teens in the quarter after third-quarter advertising sales rose 12% to $19.6 billion.

Shares had already fallen 4.3% in regular trading to $243.79 amid a wider technology selloff. Reuters reported that investors also reacted to the cash-flow trend and the guidance, even as Jassy said Amazon’s strategy was working and that AWS could reach $1 trillion in revenue in as little as five years.

Sources

• Reuters report — Amazon’s outlook, cash flow and market reaction.
• Amazon third-quarter 2026 financial results — Official revenue, earnings, free cash flow and guidance.