Amazon’s AI boom is thrilling investors even as cash flow turns red

Amazon’s AI boom is thrilling investors even as cash flow turns red
Amazon’s quarter looked like a victory lap for the AI trade — and a stress test for how much spending Wall Street will tolerate. So far, the answer is: quite a lot.

Amazon reported net sales of $200.6 billion, up 20% and ahead of expectations, with AWS once again doing the heavy lifting as demand for cloud and AI infrastructure surged. The bullish case is straightforward: AWS revenue jumped 37%, Amazon’s AI cloud and chips businesses are now running at a $25 billion annualized pace, and the company’s shares rose sharply after hours as investors bet the buildout is translating into real demand.

But there’s a catch, and it’s a big one. Amazon’s free cash flow flipped negative, with a $7.6 billion outflow over the 12 months ended June 30, as the company pours money into data centers, chips and the rest of the AI plumbing. TechCrunch framed the market’s mood neatly: investors are willing to stomach ballooning costs when the spender is a cloud host with a proven revenue engine, not an unproven AI startup.

That spending spree is only getting larger. Amazon has raised its 2026 capital expenditure forecast to $220 billion from $200 billion, underscoring just how central AI infrastructure has become to its strategy.

There was also a giant accounting tailwind. Amazon said it booked $53.4 billion in non-operating pre-tax other income, “primarily from our investment in Anthropic,” turning its stake in the AI company into a headline-grabbing windfall. That boosted the quarter’s optics, but it also sharpened the bigger debate around Big Tech’s AI push: is this a durable earnings engine, or a capital arms race that only looks comfortable while cloud growth remains this hot?

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