Amazon Misses Q3 Revenue and EPS Targets as Free Cash Flow Turns Deeply Negative
Amazon’s AI spending pushed trailing-12-month free cash flow to -$42.4B, versus +$14.8B a year earlier. AWS outperformed with $45.98B in Q3 sales, up 39%, while the company targets roughly $220B in 2026 capital expenditures.
Amazon reported third-quarter 2026 earnings on Thursday, falling short of analyst expectations on both total revenue and earnings per share, while also posting a sharply negative free cash flow figure that rattled investors.
Net sales rose 12% year-over-year to $201.9 billion, just below the $202.2 billion analysts had forecast, according to FactSet. Fully diluted earnings per share came in at $1.89, missing the expected $1.97.
The most striking figure in the report was free cash flow, which fell to negative $42.4 billion for the trailing 12 months — a steep reversal from positive free cash flow of $14.8 billion for the equivalent period ending September 30, 2025. Amazon attributed the heavy spending primarily to investments in artificial intelligence.
The one clear bright spot was Amazon Web Services. The cloud division posted $45.98 billion in sales, topping analyst expectations of $45.29 billion and representing 39% growth compared to the same quarter a year ago. AWS operating income also climbed to $17.8 billion, up from $11.4 billion in Q3 2025.
Amazon said it still expects full-year 2026 cash capital expenditures of approximately $220 billion. To put that figure in context, the company is forecasting fourth-quarter net sales of between $240 billion and $247 billion — meaning its projected annual capital spending is nearly as large as its expected revenue from its biggest sales quarter of the year, which typically benefits from the holiday shopping season.
The scale of Amazon’s capital expenditure commitment, driven largely by AI investment, suggests the company’s cash burn may remain a concern for investors even as its cloud business continues to grow at a rapid pace.