Amazon reports 39% AWS growth as AI expansion drains cash

Amazon reported third-quarter results on October 29, 2026. Revenue rose 12% from a year earlier to $201.9 billion, while diluted earnings per share fell to $1.89 from $1.95; both revenue and earnings missed analysts' expectations.^[1][2]

Amazon Web Services, or AWS, rents computing power and storage to businesses. Its revenue grew 39% to $46 billion, the fastest pace in nearly five years, and CEO Andy Jassy said he expects growth above 40% in both 2027 and 2028.^[3]

Amazon spent $77.3 billion on property and equipment during the quarter, more than twice the year-earlier amount.^[4]It maintained its $220 billion capital-expenditure forecast for 2026—the budget for building and buying long-lived assets—and Jassy expects AI spending to be “meaningfully” higher in 2027.^[5]

Amazon is building data centers to meet demand for AI services and announced plans to buy more Nvidia chips.^[6][7]Those purchases turn cloud demand into orders for chip and data-center equipment suppliers, which can earn sales before Amazon recovers its construction costs through sustained customer usage.^[6][7]

The cash pressure is already visible: Amazon's free cash flow was negative $42.4 billion over the past 12 months, meaning cash from operations did not cover capital spending.^[4]That puts pressure on technology companies' existing businesses to keep generating cash to support AI expansion.^[8]New capacity improves investment returns only if customer usage and service prices cover the initial build and ongoing operating costs; slower demand would leave that upfront spending tying up cash.^[4][9]

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