Amazon Shares Fall 6.5% After Negative $42.4 Billion Free Cash Flow on AI Spending

Amazon shares dropped 6.5% in after-hours trading Thursday after the company reported negative free cash flow of $42.4 billion for the 12 months ended Sept. 30, 2026, down from positive $14.8 billion a year earlier. The swing was driven primarily by a $94.8 billion increase in property and equipment purchases tied to AI investments, with the company projecting 2026 cash capital expenditures of $220 billion. Revenue came in at $201.9 billion, up 12% year over year but below S&P Capital IQ estimates of $202.2 billion. Net income totaled $20.7 billion, also missing the $21.4 billion estimate. On the earnings call, CEO Andy Jassy said AWS' order backlog grew to $578 billion from $496 billion at the end of the second quarter, adding that the company expects to "spend meaningfully more" on capex in 2027. Advertising growth slowed to 12% from 26% in the prior quarter.