Amazon posts $42 billion cash burn as AI spending tops $220 billion

Amazon released fiscal third-quarter results that fell short of Wall Street projections, triggering a 7% drop in its stock during after-hours trading on October 30. The Seattle-based company reported net income of $20.69 billion, or $1.89 per share, for the three months ending September 30. That figure was lower than the $21.19 billion, or $1.95 per share, recorded in the same period last year. Analysts from FactSet had anticipated earnings of $1.97 per share on sales of $202.2 billion. The actual net sales came in at $201.94 billion, a 12% increase from the $180.17 billion reported in the year-ago period.

The discrepancy in earnings stems partly from a calendar shift in Prime Day, which moved to the second quarter this year for major markets including the United States. Amazon noted that excluding this timing difference, year-over-year sales growth would have been approximately 4% higher. The company attributed the current quarter’s performance to this scheduling change, which had allowed Prime Day to fall entirely within the third quarter in 2025.

Amazon’s cloud computing unit, Amazon Web Services, showed the strongest performance. Sales in that division rose 39.3% to $46 billion, marking the fastest growth rate in nearly five years. This acceleration compared to the 37% growth seen in the previous quarter. CEO Andy Jassy told investors on a conference call that he expects AWS sales to grow 40% annually for the next two years. He projected the unit could become a business worth more than $1 trillion within five to 10 years.

Jassy outlined the company’s massive capital expenditure plans, stating that Amazon expects to spend $220 billion on technology this year. This figure includes investments in robots, semiconductors, and satellites. The amount represents a 10% increase from the $200 billion plan announced in February and is significantly higher than the $128 billion spent in the previous year. Jassy said the company is installing an AI chip roughly every 14 seconds, noting that customers are rapidly adopting the new capacity.

Despite the strong cloud growth, investors focused on the company’s cash flow, which posted a loss of $42.4 billion over the trailing 12 months. The spending pressure mirrors concerns across the tech sector, as Alphabet reported weaker growth and higher equipment costs in its own earnings release late Wednesday. Alphabet’s stock dropped sharply following that announcement. Amazon has also announced it will invest more than $1 billion over the next five years in communities hosting its data centers. The funds will support education, job training, and local infrastructure projects.

Looking toward the holiday season, Amazon provided a cautious outlook for the fourth quarter. The company projects net sales between $240 billion and $247 billion. This range represents a 12% to 16% increase compared to the same period last year. Analysts had expected fourth-quarter sales of $244.16 billion.