Amazon Shares Fall More Than 6% After Hours as Quarterly Capex Hits $77.3 Billion and Trailing Free Cash Flow Turns $42.4 Billion Negative

A day after Alphabet shares fell about 12% in a record market-value loss, Amazon handed the AI-spending debate a second data point after the closing bell on Thursday, Oct. 29. The stock had already slid 4.3% in regular trading to $243.79. It dropped more than 6% in extended trading once the third-quarter numbers came out.

The numbers

Revenue came in at $201.9 billion, up 12% from a year earlier. Analysts polled by LSEG expected about $202.3 billion. Earnings were $1.89 per share against estimates of roughly $1.96 to $1.97.

Net income was $20.69 billion, down from $21.19 billion a year ago. Amazon said the decrease was driven primarily by a $9.5 billion pre-tax gain on its Anthropic investment that was recorded in the 2025 third quarter.

The fourth-quarter outlook is the other sore spot. Amazon guided to revenue of $240 billion to $247 billion. The $243.5 billion midpoint is below the $244.5 billion analysts expected, per LSEG. Q4 includes the holiday shopping season, usually one of Amazon's biggest quarters.

The cash burn

Capital expenditures hit $77.3 billion in the quarter. A year ago it was $35.1 billion. FactSet's consensus was $58.7 billion.

Trailing 12-month free cash flow was negative $42.4 billion. That is the second straight negative quarter on that measure, after negative $7.6 billion in the June quarter. A year ago the figure was positive $14.8 billion. CNBC described the year-over-year change as a swing of 386%.

Amazon said the shortfall came mainly from higher purchases of property and equipment tied to AI investments.

"The free cash flow looks like the ugly part of the report," said Dave Wagner, portfolio manager at Aptus Capital Advisors. "Operations generated plenty of cash but their capex just absolutely swallowed it."

Jesse Cohen, senior analyst at Investing.com, called the report a "double disappointment," citing free cash flow and "weak guidance."

AWS did its job

Amazon Web Services revenue rose 39% to $45.98 billion, ahead of the roughly $45.3 billion to $45.5 billion analysts expected. Its growth rate beat the 38% forecast.

Jassy said AWS revenue growth should exceed 40% in 2027 and 2028. He told investors he expects AWS to be a $1 trillion revenue business in the next five to 10 years. He also said Amazon's chips business, including Trainium and Graviton, "continues to grow triple-digit percentages year over year."

That is the case Amazon is making. "Our AWS investment in functionality and infrastructure is working," Jassy said in the earnings release. On the call he said the company has a "clear line of sight to attractive financial returns" and added: "Our strategy is working and I expect it will for the foreseeable future."

The Heisenberg Report was not sold on the beat. It called AWS "just barely" ahead of consensus and wrote that it was hard to imagine the marginal beat being enough to carry the day.

Capex guidance holds, 2027 looms

Amazon kept its 2026 capex forecast at about $220 billion. Jassy said the company expects to "spend meaningfully more in 2027," without giving a figure.

The three biggest cloud spenders are not moving in lockstep. Microsoft cut its 2026 capex forecast this week to $170 billion from $175 billion. Alphabet held its range of $195 billion to $205 billion, and its finance chief said capex will increase significantly in 2027. Amazon held at $220 billion.

The backdrop was already jittery. On Oct. 22, the Nasdaq Composite fell 2.4% in a tech selloff over AI spending, and the 10-year Treasury yield fell about 18 basis points to 4.97%. Nvidia CEO Jensen Huang said in a CNBC interview aired that day there is "a scarcity of capital" for AI buildout because the demand for capital is "much greater than the availability of the capital."

Tech companies, including Amazon, are also issuing billions of dollars in bonds to fund the AI buildout, competing with each other and with the federal government for investors' money.

What comes next

Amazon has not said how much more it will spend in 2027. Alphabet has said it will provide further details on 2027 capex on its fourth-quarter call. Evercore ISI analysts forecast Amazon spending could reach $320 billion next year, alongside negative free cash flow of $57 billion. Wall Street now waits to see whether that cloud growth can translate into sustainable cash generation.