Amazon’s AI spending spree collided with Wall Street’s patience on Thursday, even as its cloud business delivered the growth executives say validates the gamble.

The company reported third-quarter revenue of $201.9 billion, up 12% year on year but just below analysts’ $202.2 billion estimate; net income of $20.7 billion also missed expectations. It then offered a cautious sales outlook for the holiday-quarter period, adding to the unease.¹

The sharper concern was cash. Free cash flow swung from positive $14.8 billion in the year through September 2025 to negative $42.4 billion in the 12 months through September 2026, largely after a $94.8 billion jump in property and equipment purchases tied to AI. Amazon said it expects about $220 billion in 2026 cash capital expenditure, and its shares fell 6.5% after hours.²

Andy Jassy’s answer was that demand—not speculation—is driving the buildout. AWS revenue rose 39% from a year earlier, its sixth consecutive quarter of steady growth, while the unit’s backlog climbed to $578 billion from $496 billion at the end of the second quarter. “Almost as fast as we install capacity, customers are gobbling it up,” Jassy said.²

Amazon is now signalling that the spending will intensify: Jassy said 2027 capex would be “meaningfully more” than 2026. He framed AI as a “once in a lifetime opportunity,” arguing Amazon can fund the expansion and that it will “forever change the size of Amazon.”³

That is the divide. Management sees AWS, already running at a $184 billion annualized revenue rate, growing more than 40% in both 2027 and 2028 on its way toward a trillion-dollar annual business. Investors see a costly race whose returns remain future tense—particularly after a softer ad-growth figure and a quarter that fell short of forecasts.³