AWS Grew 39% but Amazon Burned Through $42.4 Billion

Amazon Web Services grew revenue 39% year-over-year to $45.98 billion in the third quarter, beating analysts' expectations of $45.29 billion — the lone bright spot in a report that missed on nearly everything else and showed the company burning $42.4 billion in cash over the trailing twelve months.

Amazon reported earnings on Thursday. The numbers disappointed on both the top and bottom lines.

What did the quarter deliver?

The headline figures, per FactSet consensus:

• Net sales rose 12% to $201.9 billion. Analysts expected $202.2 billion.
• Fully diluted earnings per share came in at $1.89, short of the $1.97 analysts were looking for.
• AWS revenue hit $45.98 billion against an expected $45.29 billion.

The cloud unit didn't just beat on sales. AWS operating income climbed to $17.8 billion, up from $11.4 billion in the third quarter of 2025. That's the engine inside the miss — the retail side dragged, the cloud side accelerated.

The takeaway: AWS alone turned what would have been a flat quarter into a defensible one.

Why did free cash flow go negative?

Here's the number that spooked investors. Free cash flow fell to negative $42.4 billion for the trailing twelve months. Amazon spent far more cash than it generated.

Compare that to the trailing twelve months ended September 30, 2025, when free cash flow was positive $14.8 billion. That's a swing of more than $57 billion in a single year.

Amazon attributed the spending surge largely to its investments in AI. The company reiterated that it still expects to end 2026 with cash capital expenditures of roughly $220 billion, with one quarter left in the fiscal year.

The takeaway: this isn't operational leakage — it's a deliberate, AI-driven capital deployment at a scale few companies can match.

How big is $220 billion, really?

Amazon's own guidance puts it in context. The company forecast fourth-quarter net sales of between $240 billion and $247 billion — and Q4 is typically Amazon's biggest quarter thanks to holiday shopping.

So Amazon plans to spend almost as much on capital expenditures over the full year, largely for AI, as it expects to bring in from sales in the fourth quarter alone.

The takeaway: Amazon is effectively wagering a full quarter of holiday revenue on AI infrastructure.

What happens next?

Investors now have to weigh two opposing signals. AWS at 39% growth with $17.8 billion in operating income validates the AI bet on the revenue side. Negative $42.4 billion in free cash flow and a $220 billion capex bill show what that bet costs.

The fourth quarter, with $240 billion to $247 billion in guided sales, will show whether the holiday season can offset — or at least mask — the burn rate while AWS keeps compounding.