Amazon reports record operating margin but negative free cash flow as AI capex surges
Amazon posted Q3 2026 revenue of $201.9 billion, up 12% year‑over‑year, and a record operating margin of 13.9%. AWS revenue jumped 39% to $45.98 billion with operating income of $17.8 billion. However, free cash flow turned negative at $42.4 billion because the company is spending about $220 billion on AI‑related capital expenditures in 2026. The earnings release triggered mixed stock moves, with the share price falling 6.5% in after‑hours trading and rising 3‑4% in intraday sessions.
Why it matters
The strong AWS growth supports Amazon’s long‑term earnings outlook, but the massive negative free cash flow highlights short‑term cash‑burn risk from AI infrastructure spending. Investors will watch whether the $220 billion capex plan translates into sustained revenue and cash‑flow generation.
Key facts
- 1Q3 2026 revenue was $201.9 billion, up 12% YoY. 929thebull.com
- 2Free cash flow was negative $42.4 billion. 929thebull.com
- 3Capital expenditures are forecast at approximately $220 billion for 2026. 929thebull.com
- 4AWS revenue grew 39% YoY to $45.98 billion. timothysykes.com
- 5AWS operating income was $17.8 billion. finance.yahoo.com
- 6Operating margin reached a record 13.9%. finance.yahoo.com
Summary written by AlphAI AI Desk from 5 of 5 sources. Not investment advice. Figures are as stated by the linked sources.