Amazon’s cloud business is growing at its fastest pace in nearly five years, but the company’s latest financial results reveal how expensive the race to build AI infrastructure is becoming.
In its third-quarter results published on October 29, 2026, Amazon reported that Amazon Web Services (AWS) revenue increased by 39.3% year over year to approximately $46 billion.
At the same time, its trailing 12-month free cash flow moved to an outflow of $42.4 billion, primarily reflecting increased spending on property, equipment and AI infrastructure.
The results highlight an important challenge for technology companies: strong demand for AI services does not automatically translate into immediate financial returns from the infrastructure required to deliver them.
AWS is growing rapidly
AWS is one of the world’s largest cloud computing businesses, providing infrastructure and services that organisations use to host applications, store information, process data and operate AI systems.
According to Amazon’s official third-quarter financial results, AWS generated $46 billion in revenue during the quarter, representing 39.3% growth compared with the same period in 2025.
Amazon described this as its fastest AWS growth in nearly five years.
AWS also generated $17.8 billion in operating income, compared with $11.4 billion in the corresponding quarter a year earlier.
The performance suggests that demand for cloud infrastructure remains strong as businesses expand their use of AI and other computing services. Amazon.com Announces Third Quarter Results
Why is Amazon spending so much on AI?
Building AI infrastructure requires substantial investment.
Cloud providers need specialised processors, servers, data centres, networking equipment, cooling systems and reliable electricity supplies.
These investments must often be made before the full revenue benefits are realised.
Amazon’s results show the scale of this commitment.
The company reported that its free cash flow over the trailing 12 months fell to an outflow of $42.4 billion, compared with a positive $14.8 billion in the previous comparable period.
Amazon attributed the change primarily to a $94.8 billion year-over-year increase in purchases of property and equipment, net of proceeds from sales and incentives, largely reflecting investment in AI.
The company has also maintained a 2026 capital expenditure outlook of approximately $220 billion.
Amazon CEO Andy Jassy told analysts that capital expenditure in 2027 would be meaningfully higher than in 2026, although he did not provide a specific figure.
Reuters’ coverage of the results explains why investors are paying close attention to the relationship between AWS growth and the company’s expanding infrastructure commitments. Reuters
Strong revenue does not automatically mean stronger cash flow
One of the most important distinctions in Amazon’s results is the difference between operating cash flow and free cash flow.
Amazon reported trailing 12-month operating cash flow of $168.3 billion, up 29% year over year.
However, free cash flow was negative $42.4 billion because the company’s purchases of property and equipment increased substantially.
In simple terms, Amazon is generating substantial cash from its operations but is reinvesting heavily in infrastructure.
This is not the same as saying the company is unable to pay its bills or that its core business is unprofitable.
The distinction matters because capital investment can support future growth, but it also creates financial obligations and uncertainty about when the returns will arrive.
Investors are therefore assessing whether the additional infrastructure will generate enough future revenue and profit to justify the spending.
Amazon is also expanding its AI services
The investment is not limited to building physical data centres.
Amazon is expanding the software and services customers use to develop and deploy AI applications.
In its quarterly results, the company reported continued growth in Amazon Bedrock, its managed AI development service.
Amazon said Fortune 500 customer spending on Bedrock increased nearly sevenfold year over year, while total token volume grew nearly seventeenfold.
It also announced the public preview of Bedrock Managed Agents, a service designed to help organisations build and deploy AI agents.
These are company-reported adoption figures, and they do not independently establish how profitable the services are. Nevertheless, they provide an indication of the demand Amazon is seeing for its AI infrastructure and development tools. Amazon.com Announces Third Quarter Results
What does this mean for businesses using cloud services?
Amazon’s results matter beyond investors and financial analysts.
Businesses increasingly depend on cloud providers for their websites, applications, databases, AI tools and digital operations.
Continued investment in infrastructure could eventually improve computing capacity, service availability and the range of AI products available to customers.
However, the financial demands of building that infrastructure also raise questions about long-term pricing and competition.
Businesses should consider several practical points:
1. Avoid unnecessary cloud expenditure
As AI services become more widely available, organisations should assess whether their workloads genuinely require expensive computing resources.
2. Compare providers
Evaluate different cloud providers based on performance, pricing, reliability, security and compatibility with existing systems.
3. Monitor AI service costs
AI applications can generate significant usage-based expenses. Track model calls, token consumption, storage and other infrastructure charges.
4. Consider infrastructure flexibility
Avoid unnecessary dependence on one provider where practical. Data portability and compatible architectures can make it easier to adjust infrastructure decisions as the market changes.
5. Measure actual business returns
An AI project should be evaluated by the business problem it solves, not simply the number of models or agents deployed.
What should investors and the technology industry watch?
Amazon’s fourth-quarter revenue guidance is between $240 billion and $247 billion.
The company also reported third-quarter total net sales of $201.9 billion, up 12% year over year.
One important comparison caveat is that Prime Day occurred in the second quarter for most large countries in 2026, whereas it fell entirely within the third quarter in 2025. Amazon said that excluding this timing difference, third-quarter year-over-year sales growth would have been approximately four percentage points higher.
The next results will help investors assess whether the company’s infrastructure spending is translating into sustained cloud growth and improved cash generation.
Other major cloud providers are facing similar decisions. The wider technology industry is committing substantial resources to AI infrastructure, and the financial consequences will depend on how quickly demand develops and how efficiently that capacity is used.