Amazon's cloud unit booms even as overall results miss estimates

Amazon reported third-quarter earnings Thursday that missed analysts’ expectations for both total revenue and earnings per share, with other figures in the report unsettling investors too — including how much cash the company is burning.

The bright spot was Amazon Web Services: the cloud unit beat revenue expectations and grew 39% compared with the year-ago quarter. Net sales rose 12% to $201.9 billion, short of the $202.2 billion analysts polled by FactSet had expected, and diluted earnings per share came in at $1.89 against an expected $1.97. AWS sales reached $45.98 billion, ahead of the $45.29 billion analysts expected, and Amazon said AWS operating income grew to $17.8 billion, up from $11.4 billion in the third quarter of 2025.

The starker number: free cash flow fell to a negative $42.4 billion for the trailing 12 months, meaning Amazon spent far more cash than it brought in. That compares with positive free cash flow of $14.8 billion for the trailing 12 months ended September 30, 2025. Amazon said the heavy spending was driven largely by its AI investments, and with one quarter left in its fiscal year, the company reiterated that it still expects roughly $220 billion in cash capital expenditures for 2026.

Amazon forecast fourth-quarter net sales of $240 billion to $247 billion — typically the retailer’s biggest quarter thanks to holiday shopping. Measured against that outlook, the company’s expected full-year capital spending, mostly tied to AI, comes close to matching the sales it expects to bring in during just that one holiday quarter.

Why it matters

The split result — a cloud business still compounding at nearly 40% growth against a core retail business burning cash at an unprecedented rate — sharpens the question investors are asking across the industry: how long AI infrastructure spending can outrun the revenue it is meant to justify.