Amazon misses earnings targets as cloud unit grows 39% and free cash flow turns negative
Investors are weighing strong AWS growth against a negative cash position driven by roughly $220 billion in planned spending this year.
Amazon's third-quarter results came in below analyst forecasts on total revenue and per-share earnings, though its cloud division posted strong growth. Net sales rose 12% to $201.9 billion against an expected $202.2 billion, and fully diluted earnings per share landed at $1.89 versus $1.97 anticipated. Amazon Web Services grew 39% year over year to $45.98 billion, beating estimates, and its operating income climbed to $17.8 billion from $11.4 billion a year earlier. The bigger concern for investors is cash: trailing twelve-month free cash flow turned negative at $42.4 billion, driven largely by AI spending, and Amazon reaffirmed plans for roughly $220 billion in cash capital expenditures this year. For developers and founders, the takeaway is that AWS demand remains strong while the infrastructure buildout is costing the company heavily.
Why it matters
For readers following the industry, the quarter shows that demand for Amazon's cloud business is still rising faster than the rest of the company, while the cost of building AI infrastructure is pulling cash out of the business. Amazon's net sales and earnings per share both fell short of expectations, so the cloud segment is carrying the story. Whether the spending turns into sustained profit is the question the numbers leave open.
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