Wall Street spent the week punishing Big Tech’s biggest AI spenders. Amazon (AMZN) just recorded the largest cash burn in its history.
Amazon’s free cash flow — the money left after paying for data centers, warehouses and equipment — represented an outflow of more than $42 billion in the 12 months through September, according to its third-quarter results released Thursday. That’s nearly double the previous record of around $23 billion, set in 2022 after Amazon overbuilt its warehouse network. Three months earlier, capital outflows were less than $8 billion.
A quarter caused most of the damage. Amazon spent about $77 billion on real estate and equipment from July to September, more than double the $35 billion it spent a year earlier. Its operations brought in about $42 billion, leaving a deficit of about $33 billion over three months, according to Yahoo Finance calculations.
So far, the spending is working.
Amazon Web Services (AWS) grew 39% to about $46 billion, its fastest pace in nearly five years, and Amazon’s operating margin of nearly 14% was its highest on record. CEO Andy Jassy said in the release that he expects AWS to grow more than 40% in 2027 and 2028. Anthropic’s (ANTH.PVT) IT commitments alone represent about a fifth of AWS’ backlog as of June, according to Yahoo Finance calculations based on the AI lab’s IPO filing.
To pay for it, you had to borrow. Amazon’s long-term debt rose to about $173 billion at the end of September, from about $66 billion at the end of 2025, while its cash flow fell to about $56 billion from about $87 billion. Meta (META) took a different path this week with a nearly $100 billion stock sell-off.
Bond traders have noticed. The cost of insuring Amazon’s debt against default for five years with credit default swaps has increased by about 50% since early August, according to Bloomberg data. That price implies about a 7% chance of default over five years, compared to about 5%, according to Yahoo Finance calculations.
Amazon stock fell about 4% Thursday to its lowest level since July 30, as Alphabet’s record decline weighed on Big Tech. It fell further after hours as sales, earnings and earnings outlook for the holiday quarter came in below estimates.
243.79 -10.81 (-4.25%)
Closing: October 29 at 4:00:01 p.m. EDT
225.98 -17.81 (-7.31%)
AMZN GOOG
Amazon has no intention of giving up. CEO Andy Jassy said during the company’s earnings conference call Thursday that Amazon still plans to spend about $220 billion this year, mostly on AWS, and “spend a lot more in 2027.”
“Would it be more practical if this type of acceleration and opportunity happened over 25 years and you could spread the CapEx over 25 years? Yes, it might be more convenient, but that’s not the world we live in,” Jassy said. “We can finance this plan. I think it will change the size of Amazon forever.”
In-house AI tools helped analyze interview transcripts, research, and write this article. Humans reviewed, edited and fact-checked the material before publication.
Follow Jared Blikre on X @SPYJared or email him at jaredblikre@yahooinc.com.
Gn bussni
