Amazon shares fall as negative free cash flow widens on $220bn AI spending plan

Free cash flow turns negative

Amazon reported on Thursday, 29 October 2026, that its free cash flow over the 12 months to 30 September 2026 was negative $42.4 billion. For the 12 months to 30 September 2025 the same measure was positive $14.8 billion. The company put most of the swing down to a $94.8 billion rise in purchases of property and equipment tied to AI. Revenue reached $201.9 billion, up 12%, though that fell short of the $202.2 billion S&P Capital IQ had estimated. Net income of $20.7 billion also missed the $21.4 billion forecast.

Year to 30 Sep 202514.8

Year to 30 Sep 2026-42.4

Year to 30 Sep 2025

14.8 $bn

Year to 30 Sep 2026

-42.4 $bn

Data from the article text

Spending plans and share reaction

Amazon expects cash capital expenditure of $220 billion in 2026. Quarterly capex figures differ by source: Bloomberg reported more than $77 billion on property and equipment, while the Financial Times cited $75.8 billion. Amazon Web Services sales rose 39% to $46 billion in the quarter. AWS CFO John Felton told Axios earlier in October that he was "comfortable about what we're doing" on capex. Investors have also weighed a Gartner estimate that more than $3.5 trillion of AI infrastructure spending could face impairment by 2030.

Shares fell after the report, by 6.5% in after-hours trading according to Axios and about 5% according to the Financial Times, while The New York Times put the drop at more than 4% by Thursday's close. Advertising growth slowed to 12% from 26% in the previous quarter, and the ad business could come under pressure as shoppers turn to AI agents.

A sector-wide spending wave

Amazon, Microsoft, Google and Meta said they were on track to spend more than $720 billion this year on data centres and other capital expenses, around three times their spending of two years ago. Most of the four now spend more on data centres than their businesses generate in cash, and all are expected to spend even more next year. Google shares had fallen more than 12% by Thursday's close after its results on Wednesday, 28 October, and Meta shares fell 7% after its results showed it was issuing new stock to raise funds. Oracle and SpaceX have also sharply increased their spending and borrowing.

David Tsui, a technology credit analyst at S&P Global Ratings, warned that the swings could last for years.

“Slight differences is causing a lot of volatility”

He added that the returns from current spending are years away.

Job cuts and AI usage limits

Amazon cut up to 250 roles in its devices and services unit, which makes Kindle e-readers, Echo speakers and hardware running its Alexa assistant. Staff were told early on Wednesday, 28 October, and a person familiar with the matter said most of those affected were software developers. An Amazon spokesperson said:

“We've made the difficult decision to eliminate a small number of roles”

Earlier in October, Amazon cut fewer than 1,000 office jobs in its retail division across the US, India and the UK. Since 2022 it has cut more than 57,000 corporate jobs, and it plans to hire more than 300,000 US workers for the holiday season.

Amazon has told its coders that efforts to rank staff by AI token use were "deeply flawed". In a note, vice-president Terk Terkowitz warned that using such metrics as targets could raise costs. The company said:

“Judgment and care are key: we believe that it is best to measure and be measured by long-term outcomes.”

Amazon shut an internal leaderboard of its heaviest AI users earlier this year, and Andy Jassy has previously said the company will need fewer employees as more work is automated.