Amazon’s $220 Billion AI Bet Spooks Investors Even as AWS Surges
Amazon’s $220 Billion AI Bet Spooks Investors Even as AWS Surges
Amazon entered its latest earnings report with Wall Street already questioning whether the AI infrastructure race was becoming too expensive. The answer from Seattle was emphatic: spend more.
For the 12 months through Sept. 30, Amazon’s free cash flow swung from a positive $14.8 billion a year earlier to negative $42.4 billion. The company tied the reversal chiefly to a $94.8 billion increase in property and equipment purchases for AI-related investment. It then said 2026 cash capital expenditures would reach about $220 billion, with most of that directed to AWS.
The quarterly numbers gave sceptics fresh ammunition. Revenue rose 12% to $201.9 billion, just below the $202.2 billion analysts expected, while net income of $20.7 billion also missed forecasts. Amazon offered a cautious outlook for the holiday-quarter period, and its shares fell 6.5% in after-hours trading. Advertising growth, at 12%, also slowed sharply from the prior quarter’s 26%.
Andy Jassy’s case is that Amazon cannot afford restraint while AI demand is racing ahead. AWS revenue rose 39% from a year earlier, and its order backlog reached $578 billion, up from $496 billion at the end of the previous quarter. “Almost as fast as we install capacity, customers are gobbling it up,” Jassy said.
On the earnings call, he cast the investment as a bid for a far larger prize: AWS, now running at a $184 billion annualized revenue rate, could grow more than 40% in both 2027 and 2028 and become a trillion-dollar business within five to 10 years. “We’re going to invest to continue being the leader,” Jassy said.
That vision has yet to settle the market’s argument. Amazon expects to spend “meaningfully more” again in 2027; investors are demanding proof that the capacity arrives with durable returns.
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