Amazon Shares Fall 6.5% After Hours as AI Spending Drives Free Cash Flow to Negative $42.4 Billion

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, driven by a $94.8 billion increase in property and equipment purchases tied to AI investments. The company guided to $220 billion in 2026 cash capital expenditures and said it expects to spend "meaningfully more" in 2027, CEO Andy Jassy said on the earnings call. AWS' order backlog has grown to $578 billion from $496 billion at the end of the second quarter. Revenue rose 12% to $201.9 billion, missing S&P Capital IQ estimates of $202.2 billion, while net income of $20.7 billion also fell short of the $21.4 billion estimate. Advertising growth slowed to 12% from 26% in the prior quarter, which Jassy attributed partly to timing anomalies including a shift in Prime Day.