Amazon Spends $77.3 Billion on Capex in Quarter as AWS Growth Hits 39%
By Annie Palmer · · TexaHub · Artificial Intelligence, AI in Industry, Technology Trends
Amazon reported third-quarter capital expenditures of $77.3 billion, more than double a year earlier, as AWS revenue rose 39% to $46.0 billion. Trailing twelve-month free cash flow swung to an outflow of $42.4 billion.
AWS Growth Accelerates
Amazon reported third-quarter 2026 results on Oct. 29, with net sales up 12% to $201.9 billion and operating income of $28.1 billion, up from $17.4 billion a year earlier. The company said its 13.9% operating margin was its highest on record. [1]
Amazon Web Services sales rose 39% to $46.0 billion, the segment's fastest growth in nearly five years, and AWS operating income climbed to $17.8 billion from $11.4 billion. The company put the AWS annual revenue run rate at $184 billion. [1]
Net income fell to $20.7 billion from $21.2 billion, and diluted earnings per share were $1.89 against $1.95 a year earlier. The prior-year quarter included $9.5 billion in pre-tax gains from Amazon's investments in Anthropic. Analysts polled by LSEG had expected $1.96 per share. [1] [2]
Spending Outpaces Cash Generation
Capital expenditures reached $77.3 billion in the quarter, compared with $35.1 billion a year earlier and a FactSet estimate of $58.7 billion, CNBC reported. Amazon kept its forecast of roughly $220 billion in cash capital expenditures for 2026, most of it for AWS. [2] [1]
Purchases of property and equipment over the trailing twelve months totaled $215.2 billion, up from $120.1 billion, which Amazon attributed mainly to investment in artificial intelligence. Operating cash flow rose 29% to $168.3 billion over the same period, but free cash flow was an outflow of $42.4 billion, compared with an inflow of $14.8 billion a year earlier. [1]
Chief executive Andy Jassy said Amazon expects to "spend meaningfully more in 2027." Shares fell more than 6% in extended trading after the report. [2]
AI Services and Chips
Amazon said spending on its Bedrock AI platform by Fortune 500 customers grew nearly sevenfold year over year, and total token volume on the service grew nearly 17-fold. It added models from OpenAI, Anthropic, Moonshot AI, SpaceXAI and Z.ai to Bedrock and launched Bedrock Managed Agents in public preview. [1]
Jassy said revenue from Amazon's in-house chips continues to grow at triple-digit percentages year over year and that the company plans to make its Trainium chips available outside AWS in late 2027. He said he expects AWS revenue growth of more than 40% in both 2027 and 2028. [2]
Fourth-Quarter Outlook
Amazon guided fourth-quarter net sales of $240.0 billion to $247.0 billion and operating income of $28.5 billion to $33.5 billion, compared with $25.0 billion in the fourth quarter of 2025. The midpoint of the revenue range was below the $244.5 billion Wall Street had expected, according to LSEG. [1] [2]
Sources
[1] Amazon.com Announces Third Quarter Results (Form 8-K, Exhibit 99.1) — Amazon.com, Inc. / SEC
[2] Amazon posts negative free cash flow of $42.4 billion, holds 2026 capex unchanged — CNBC