Amazon posts $33.5 billion quarterly free cash outflow despite 39% AWS growth

Amazon generated $42.4 billion of operating cash in the third quarter and spent $75.9 billion on property and equipment after sales proceeds and incentives. That leaves a $33.5 billion quarterly free-cash-flow outflow, calculated from the company’s October 29 results, even as AWS revenue grew 39.3%.

The distinction matters: Amazon’s headline $42.4 billion free-cash-flow outflow covers the trailing twelve months. The quarterly calculation isolates how sharply spending accelerated in the latest reporting period.

The cash gap inside the annual number

The arithmetic uses Amazon’s own definition: operating cash flow minus purchases of property and equipment, net of proceeds from sales and incentives. Figures below are billions of dollars, rounded after calculation.

Operating cash improved by $6.9 billion from a year earlier. Net equipment spending increased by $41.7 billion. The resulting $34.8 billion deterioration in quarterly free cash flow explains the change in the rolling annual figure from a $7.6 billion outflow at June 30 to a $42.4 billion outflow at September 30.

That rolling comparison replaces last year’s third quarter with this year’s. It does not mean the annual outflow and quarterly outflow can be added together. Nor does free cash flow include every investing cash movement: Amazon reports acquisitions and non-marketable investments separately.

AWS growth is real, and the spending bill is larger

AWS revenue reached $46.0 billion, its fastest growth in nearly five years, according to Amazon. The unit earned $17.8 billion in operating income. Its operating margin was 38.7%, compared with 39.4% in the preceding quarter.

Across Amazon, operating income rose to $28.1 billion from $17.4 billion a year earlier. Net income nevertheless slipped to $20.7 billion from $21.2 billion. Amazon attributed that decline primarily to $9.5 billion of pre-tax Anthropic investment gains in the year-earlier quarter.

For investors assessing the infrastructure buildout, the figures frame two separate questions: whether cloud demand is expanding, and whether cash generation is catching up with construction and equipment payments. This quarter shows stronger demand alongside a wider cash shortfall. Amazon says the increase in trailing-year net equipment purchases primarily reflects artificial-intelligence investment.

The next test

Amazon maintained its expectation of approximately $220 billion in 2026 cash capital expenditures. It forecasts fourth-quarter sales of $240 billion to $247 billion and operating income of $28.5 billion to $33.5 billion. Those are management expectations.

The next report will test whether rising operating cash can narrow the spending gap. A stronger income statement alone would not establish that: the cash-flow statement measures the payments actually passing through the business.

Source: Amazon third-quarter 2026 results and accompanying financial tables, October 29. Quarterly free cash flow and changes calculated by The Company Chronicle. This is market information, not investment advice.