Amazon Spends $77 Billion in a Quarter and Borrows

SEATTLE, Oct. 29 — AmazonAmazon spent $77.3 billion on property and equipment in the third quarter, more than Microsoft, Alphabet, Meta or Amazon itself had spent in any quarter since at least the start of 2024. Over the twelve months to Sept. 30 its free cash flow was an outflow of $42.4 billion, and in the quarter it raised $48.1 billion of long-term debt.

That was more than twice the $35.1 billion it spent a year earlier. Amazon held its forecast for the year at “approximately $220 billion,” and Andy Jassy, its chief executive, told investors that it expects to “spend meaningfully more in 2027,” CNBC reported.

The quarter’s figure, reported on Thursday after the market closed, was 42.5 percent more than the second quarter’s $54.2 billion, until now the largest of the four’s. Net of proceeds from sales and incentives, it was $75.9 billion, the “cash CapEx” that Brian Olsavsky, Amazon’s finance chief, gave on the call, according to a transcript published by MarketBeat. It “primarily relates to AWS and AI,” he said.

The money is for a cloud business growing faster than it has in nearly five years: sales at Amazon Web Services rose 39 percent, to $46.0 billion, and its operating income 55 percent, to $17.8 billion. For shareholders, the bill comes first. Amazon’s shares, which had closed down 4.25 percent on Thursday at $243.79, fell as low as $214.01 at 4:03 p.m. in after-hours trading, 12.2 percent below the close, after what CNBC called “disappointing third-quarter results and ballooning negative free cash flow.” At 5:21 a.m. on Friday they were at $227.40 in pre-market trading, down 6.7 percent.AMZNNasdaq240.35▼3.44−1.4%Amazon · Friday’s session

Analysts had expected capital spending of $58.7 billion, according to FactSet, as CNBC reported. Earnings of $1.89 a share fell short of the $1.96 that analysts polled by LSEG expected, and revenue of $201.9 billion of their $202.31 billion.

The Cash

Free cash flow over twelve months fell to an outflow of $42.4 billion, from an inflow of $14.8 billion a year earlier, and Amazon said the rise in its spending behind it “primarily reflects investments in artificial intelligence.”Free Cash FlowAmazon’s measure is cash from operations less purchases of property and equipment, net of proceeds from sales and incentives. Over the twelve months to June 30 it was an outflow of $7.6 billion; to March 31, an inflow of $1.2 billion. Net purchases of property and equipment over the twelve months rose $94.8 billion from a year earlier, to $210.7 billion. In the third quarter alone, by our arithmetic, cash from operations of $42.42 billion covered 56 percent of net spending, leaving a gap of $33.5 billion.

Amazon is borrowing: it raised $48.1 billion of long-term debt in the quarter and $115.1 billion in the first nine months of the year. Its long-term debt stood at $173.1 billion on Sept. 30, from $65.6 billion at the end of 2025, and its interest expense in the quarter, $1.69 billion, was more than three times the $538 million of a year earlier.

Asked on the call by Doug Anmuth of JPMorgan about the capital the growth would take, Mr. Jassy said, “it’s meaningful.” He added: “We can fund this plan. I think it will forever change the size of Amazon.”

With Amazon’s report in, the four big spenders’ capital spending came to $208.7 billion in the third quarter, by our sum of each company’s own measure: 21.9 percent more than the $171.2 billion of the second quarter, and 84.2 percent more than the $113.3 billion of a year earlier. Amazon’s share was 37 percent.The MeasuresMicrosoft, $45.2 billion: capital expenditures including finance leases, as its finance chief gave them. Alphabet, $51.4 billion, and Amazon, $77.3 billion: purchases of property and equipment. Meta, $34.9 billion: capital expenditures including principal payments on finance leases.

The Quarter

Amazon’s sales rose 12 percent, to $201.9 billion. Operating income rose 61 percent, to $28.1 billion, a margin of 13.9 percent that the company called “Amazon’s highest operating margin ever.”Prime DayAmazon held Prime Day in the second quarter this year in most large countries; in 2025 it fell entirely in the third. Without the shift, the company said, third-quarter sales growth would have been about 400 basis points higher. Net income fell to $20.7 billion, or $1.89 a diluted share, from $21.2 billion, or $1.95, a decrease “driven primarily by pre-tax gains of $9.5 billion in third quarter 2025 included in non-operating income (expense) from our investments in Anthropic,” the release said. This quarter Amazon reported net other expense of $703 million, against other income of $10.2 billion a year earlier.

Online-store sales rose 2 percent, to $68.5 billion, short of StreetAccount’s $69.68 billion estimate, and advertising rose 11 percent, to $19.6 billion, against $20.82 billion, CNBC reported. For the fourth quarter, Amazon forecast sales of $240.0 billion to $247.0 billion, a midpoint below LSEG’s consensus of $244.5 billion, and operating income of $28.5 billion to $33.5 billion.

The unchanged forecast for the year leaves, by our arithmetic, about $47.8 billion of cash capital spending for the fourth quarter, well below the third quarter’s $75.9 billion. Amazon has spent $172.2 billion, net, in the first nine months, and its word for the year is “approximately.” No one on the call put a figure on the fourth quarter, according to the transcript. “The amount of capacity we add each quarter will vary,” Mr. Jassy said, when asked about adding capacity in the fourth quarter. Microsoft trimmed its own forecast for 2026 this week, to $170 billion, and Alphabet held its at $195 billion to $205 billion, CNBC noted.

Mr. Jassy’s case is the cloud. Amazon projects AWS revenue growth of more than 40 percent in both 2027 and 2028, he said in the release, and “There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years.”

There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years.

“Backlog is $578 billion, growing triple digits year-over-year and well-diversified,” Mr. Jassy said on the call. The figure is not in the release. “We’re installing an AI accelerator about every 14 seconds, and almost as fast as we install capacity, customers are gobbling it up,” he said.

Amazon also designs chips of its own. Revenue commitments for its Graviton and Trainium chips “have each increased more than 20x year-over-year,” Mr. Jassy said, and Amazon intends to make Trainium available outside AWS “late in 2027.”Amazon’s ChipsTrainium is Amazon’s custom AI accelerator, in the release’s words; Graviton is its own server processor. Customers using Amazon’s custom silicon “saved more than $2 billion in Q3 alone,” Mr. Jassy said.

What Comes Next

The spending is income for the companies that build, power and equip data centers, and for the makers of the chips inside them, at a price Amazon does not fully control. Its release lists “resource and supply volatility, including for memory chips” among the risks to its forecast, and Mr. Jassy spoke on the call of “heightened component costs like memory.” For now its shareholders pay, through the cash flow and the debt.

Amazon’s quarterly report to the S.E.C., its 10-Q, had not been filed by 5:25 a.m. on Friday. It may say more about the backlog and Amazon’s commitments, and about a $24.0 billion outflow in the quarter for “acquisitions, net of cash acquired, non-marketable investments, and other,” which the release does not explain. AWS holds re:Invent, its customer conference, in Las Vegas from Nov. 30 to Dec. 4. A figure for 2027’s “meaningfully more” may come with the fourth-quarter results.