Amazon reported third-quarter results on October 29, 2026, with net sales of $201.9 billion (up 12%) and operating income of $28.1 billion at a record 13.9% margin. AWS grew 39% to roughly $46 billion. Trailing-twelve-month free cash flow turned to a $42.4 billion outflow, driven by approximately $77 billion in property and equipment spending in the quarter. Technology and infrastructure teams should model higher AI-related capex into 2027 capacity and vendor contracts this week.
Amazon’s October 29 earnings confirmed that the company’s AI infrastructure build-out has produced the largest free-cash-flow outflow in its history even as AWS posted its fastest growth in nearly five years. Net sales rose 12% to $201.9 billion. Operating margin reached a record 13.9%. AWS net sales increased 39.3% to an annualized run rate of $184 billion. The cash-flow swing, however, dominates the operator picture: trailing free cash flow was an outflow of $42.4 billion, and management maintained roughly $220 billion in full-year capital-expenditure guidance.
What changed?
Trailing free cash flow flipped to a $42.4 billion outflow on record AI-related capital spending while AWS growth accelerated to 39%.
When?
Results released after the close on October 29, 2026; fourth-quarter guidance issued the same day.
Who is affected?
Technology teams buying cloud capacity, infrastructure procurement groups negotiating multi-year GPU and data-center contracts, and finance partners tracking free-cash-flow covenants.
What to do this week?
Re-run AWS reserved-instance and savings-plan scenarios against the new capex trajectory and review any vendor financing tied to Amazon’s cash-flow profile.
What did Amazon report on October 29?
Amazon.com, Inc. announced third-quarter results for the period ended September 30, 2026. Net sales increased 12% to $201.9 billion compared with $180.2 billion a year earlier. Operating income was $28.1 billion, producing a 13.9% operating margin—the highest in company history. AWS net sales rose 39.3%, the fastest growth in nearly five years, to a $184 billion annualized revenue run rate. Net income was $20.7 billion, or $1.89 per diluted share. Management guided fourth-quarter net sales between $240.0 billion and $247.0 billion.
How did free cash flow turn negative?
Free cash flow over the trailing twelve months was an outflow of $42.4 billion. In the third quarter alone the company spent approximately $77 billion on property and equipment, more than double the year-earlier quarter. Operations generated roughly $42 billion in the period, leaving a large cash gap. Long-term debt rose substantially as Amazon financed the build-out. The company still expects capital expenditures of about $220 billion for the full year 2026.
The company guided fourth-quarter net sales between $240.0 billion and $247.0 billion, representing growth of 12% to 16%. Operating cash flow for the trailing twelve months rose 29% to $168.3 billion. In the quarter, purchases of property and equipment reached approximately $77 billion, more than double the year-earlier period, while long-term debt increased as Amazon issued roughly $48 billion in new debt to fund the build-out. North America sales rose 6% to $112.9 billion and International sales rose 5% to $43.1 billion (8% excluding currency). CEO Andy Jassy noted that AWS is projected to grow over 40% in both 2027 and 2028 and could reach a $1 trillion annual-revenue run rate within five to ten years.
Why is the spending concentrated now?
Demand for AI training and inference capacity continues to outstrip available supply of power, land, and specialized chips. AWS signed new agreements with multiple large customers during the quarter. CEO Andy Jassy has reiterated that AWS is on a path toward a $1 trillion annual-revenue run rate within five to ten years. The cash-flow impact is the near-term cost of that capacity race; competitors including Microsoft, Alphabet, and Meta have reported similarly elevated capital intensity.
What should technology operators do this week?
Review open AWS commitments against the new spending trajectory. Confirm that any multi-year capacity reservations still align with internal demand forecasts. Ask account teams for updated delivery timelines on GPU clusters and power availability. Finance partners should update cash-flow models for any contracts that reference Amazon’s free-cash-flow metrics or credit metrics. Procurement groups negotiating with other hyperscalers can use the published numbers as a public benchmark for industry-wide capital intensity.
What to watch next
Fourth-quarter results will show whether the $220 billion full-year capex target holds or moves higher. Watch AWS sequential growth and any commentary on power or chip constraints. Peer results from Microsoft (already reported strong Azure growth) and the remaining hyperscalers will indicate whether the industry can sustain the current spending pace without further balance-sheet strain. Midterm elections and any subsequent policy shifts on data-center permitting or energy could also affect the 2027 build-out schedule.
How large was Amazon’s free-cash-flow outflow?
Trailing-twelve-month free cash flow was an outflow of $42.4 billion as of the third quarter ended September 30, 2026.
What was AWS growth?
AWS net sales increased 39.3% year-over-year, the fastest rate in nearly five years, reaching a $184 billion annualized run rate.
Did Amazon raise full-year capex guidance?
Management maintained the expectation of approximately $220 billion in capital expenditures for 2026.
Should cloud buyers expect price increases?
Amazon has not announced broad AWS price increases. Operators should monitor reserved-instance pricing and capacity availability rather than list prices.
How does this compare with prior cycles?
The $42.4 billion outflow exceeds the previous record set in 2022 after the company overbuilt its warehouse network.
Last Updated: October 31, 2026.
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