AWS Grows at Record Pace, but Amazon's Free Cash Flow Is Minus $42.4 Billion
Amazon delivered its fastest AWS growth in nearly five years as third-quarter figures landed on Thursday, October 29, 2026 — but the same day, the accounts showed negative free cash flow of $42.4 billion.
Amazon delivered its fastest AWS growth in nearly five years when its third-quarter figures came out on Thursday, October 29, 2026, but the same day the accounts showed negative free cash flow of $42.4 billion. CEO Andy Jassy promises "meaningfully more" investment in 2027 and claims AWS can grow above 40% for two years — and become a trillion-dollar business. The market did not take the promise at face value: the stock fell roughly 6–7% in after-hours trading.
Amazon presented its third-quarter 2026 figures and held its earnings call on Thursday, October 29, 2026. The picture is twofold: the cloud service AWS is growing faster than at almost any point in nearly five years, while the company's AI push is devouring cash and the quarterly results landed below analysts' expectations on several points.
The Quarterly Numbers the Market Pushed Back On
AWS posted revenue of $46 billion in the quarter, up 39% from the same quarter a year earlier — the fastest growth rate in nearly five years, according to Reuters. But the company as a whole disappointed on two other counts. Total revenue came in at $201.9 billion, below expectations, according to Gizmodo. Earnings per share came in at $1.89 versus an expected $1.97, writes GeekWire, pointing to higher interest costs on Amazon's growing debt and other losses eating into profit — although operating income, according to the same source, beat expectations.
For the fourth quarter, Amazon is guiding for revenue of $240.0–247.0 billion. The midpoint of $243.5 billion sits below the LSEG consensus of $244.51 billion, according to Reuters.
Advertising revenue was another disappointment: growth of just 12% to $19.6 billion, against an LSEG estimate of 18% growth. It is the first time in seven quarters that the advertising side has missed analyst estimates, and Amazon points in part to Prime Day being moved into the second quarter.
After the figures landed, the stock fell in after-hours trading. The sources disagree on the magnitude: TechCrunch and Business Insider report around 6%, while Reuters, GeekWire and Gizmodo report around 7%. The exact figure may have moved during trading.
$220 Billion in 2026 — and "Meaningfully More" in 2027
The cash flow is the most striking change. Amazon's free cash flow over the last 12 months sank to minus $42.4 billion, according to Gizmodo. By comparison, the cash burn was minus $7.5 billion last quarter, and in the same quarter last year $14.8 billion flowed in. The company itself highlights a jump of $94.8 billion in purchases of property and equipment tied to the AI investments as the main cause.
The investment pace is record-setting. Jassy said on the earnings call that Amazon still expects around $220 billion in cash capital expenditures in 2026, the majority of it going to AWS — and that there will be more:
"We still expect capital investments of approximately $220 billion in 2026 — primarily for AWS — and expect to spend meaningfully more in 2027, with clear line of sight to attractive financial returns," Jassy said, according to TechCrunch.
CFO Brian Olsavsky stated that Amazon spent $75.9 billion in cash capital expenditures in the third quarter alone, mainly on AWS and AI infrastructure, according to Business Insider. Note that the sources give different figures for the same quarter: Reuters, citing LSEG data, reports $77.26 billion in capital investments, roughly $20 billion above estimates. The two figures are not reconciled in the sources and may reflect different ways of counting (for example, accrual versus cash basis). Both point in the same direction: the spending is far above what the market had expected.
Jassy's Evidence: a $578 Billion Backlog
Jassy builds the forecasts on a concrete quantity: AWS has a backlog — contracted future revenue — of $578 billion, more than doubled in one year, he said on the earnings call according to GeekWire. That means customers have already committed to purchases far beyond today's billing, which is the company's strongest evidence that the demand is real and not just a promise.
He also said that Amazon has good visibility into the future. "We have very good visibility into 2027 and 2028, and parts of 2029 as well, in terms of what customers want in the really large capacity blocks," Jassy said according to Business Insider. The largest customers are reserving capacity in blocks of hundreds of megawatts, up to a gigawatt.
On this basis, Jassy claimed that AWS "can grow above 40 percent in both 2027 and 2028, and be a trillion-dollar revenue business within the next five to ten years." AWS already generates revenue at an annualized run rate of $184 billion, according to TechCrunch. This is a forecast from the company itself, not a verified result, and it depends on Amazon actually managing to build out capacity in line with its promises.
In the third-quarter earnings release, Jassy went further and pointed to two candidates for the historic top spot: "There has never been a trillion-dollar revenue business, and we may get two of them within the next 5–10 years," he said according to The Verge. The two businesses are AWS and Amazon's stores.
Jassy also reassured the market that Amazon can afford the push: "We're going to invest to continue to be a leader," he said according to TechCrunch. "We can fund this plan, and I think it will forever change the size of Amazon. It will forever change our revenue."
What Is Verified — and What Is Promises
It is worth separating the two layers of this story. Verified results from the quarter are AWS's 39% growth to $46 billion, the negative free cash flow of $42.4 billion over twelve months, EPS of $1.89 versus $1.97 expected, advertising growth of 12% to $19.6 billion, and the backlog of $578 billion.
What are the company's own forecasts, on the other hand, are the growth pledge above 40% in 2027 and 2028, the trillion-dollar target five to ten years out, the claim of "clear line of sight" to attractive returns, and the statement that 2027 investments will be "meaningfully more" than $220 billion. The market's reaction — the stock drop of roughly 6–7% — indicates that investors have not yet weighted Jassy's future scenarios heavily enough to carry the quarter's cash burn and misses against expectations.
A couple of things remain open. The exact stock decline is unclear, since the sources range between 6% and 7% in after-hours trading. The third-quarter capex figures are reported differently by different sources ($75.9 billion at Business Insider, $77.26 billion at Reuters/LSEG) without clarification of how they relate. And Jassy's own growth pledges for 2027 and 2028 depend entirely on Amazon actually managing to build out the capacity it has promised customers — which is precisely the promise the market has so far not bought.