Amazon’s spending on AI infrastructure is skyrocketing, leading to negative cash flow, as one report claims $5 billion in NVIDIA GB300 rack shipments took place in August alone.

The race for AI is forcing tech titans like Amazon to buy up NVIDIA’s GB300 racks faster than they can be powered up, with a new report saying the e-commerce giant received “$5 billion in shipments” in the month of August, followed by $3 billion in shipments every month thereafter. The decision to order these racks in advance without having the infrastructure caused its free cash flow to drop sharply, and according to AWS’s CFO, the situation is not expected to improve for a few years.

Although Amazon does not have power for NVIDIA’s GB300 racks, Amazon’s capital spending is reportedly targeted at $200 billion for 2026.

Additional details from Business Insider reveal that some AWS data centers reportedly have the physical space for the GB300 racks but not enough power to run them, so the equipment is stored in warehouses. Amazon also takes ownership of hardware early, tying up cash well before the racks generate revenue, but the impact this has is reflected in its free cash flow, which fell from around $50 billion in the first quarter of 2024 to around $1 billion in the first quarter of 2026.

The situation was even more dire in the second quarter of 2026, when Amazon’s free cash flow fell to less than $7.6 billion. This largely reflects a $66.1 billion year-over-year increase in net purchases of real estate and equipment, but Amazon isn’t taking a backseat to this ridiculous spending, as its capital spending plans are expected to reach a whopping $200 billion or more for 2026. Then again, Amazon has never been a stranger to negative cash flow in the past.

The company experienced the same scenario in 2022 and early 2023, while it was busy with its heavy logistics development. Unfortunately, this time the scale is enormous and the spending is on AI infrastructure whose return on investment timeline is less certain and more worrying. At an internal meeting in September, AWS CFO John Felton joked with infrastructure chief Prasad Kalyanaraman: “You considered our free cash flow negative as a company, so congratulations.” »

Although Business Insider said the remark was intended as a joke, Kalyanaraman did not dispute the assumption, as he reportedly described Amazon’s AI business as deeply cash-flow negative and expects free cash flow to remain below zero for a few more years. However, AWS’s revenue figures indicate that demand is not the problem, as the segment grew 37% in the second quarter and its order backlog reportedly stands at $496 billion.

The problem is timing, and with every GB300 rack stored in a warehouse, capital returns nothing, while electrical constraints, construction delays and equipment delivery times push revenue further away. NVIDIA won’t hesitate to offer these deliveries to lucrative customers like Amazon since it makes between $3 billion and $5 billion in revenue, but the pace of future deliveries could eventually be called into question if customers can’t power these racks.

Amazon’s spending plan to anticipate demand has already paid off with cloud computing and logistics. So it will be interesting to see how quickly the company defines the power requirements of these racks and recoups its colossal investment.

News source: Business Insider

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