Amazon's biggest cash burn in history: Why $42 billion vanished in just a year?

Amazon has seen its largest ever free cash flow loss after investing billions into its artificial intelligence and cloud infrastructure. It has resulted in Amazon reporting a negative free cash flow of $42.4 billion for the 12 months ending on September 2026, compared with a positive $14.8 billion in the same period last year. Amazon has invested in increasing its data centres and buying new equipment to meet increasing AI demand. This has helped to boost revenues of Amazon Web Services (AWS). Here is why Amazon is investing so much.

Amazon’s $42.4 billion cash burn: What happened?

Amazon reported a negative free cash flow of $42.4 billion over the 12 months ending September 2026. This compares with a positive cash flow of $14.8 billion last year. This is almost double the previous record cash burn of around $23 billion in 2022. The cash burn happened as the Amazon is expanding its warehouse network beyond demand. Free cash flow is the amount of cash a company has left after paying for its operating costs and capital expenditure like property, equipment and infrastructure.


Amazon’s cash burn is due to:

Capital Expenditure

Amazon spent $77.3 billion on property and equipment in the third quarter, compared with $35.1 billion one year ago.

Operating Cash

Amazon generated around $42 billion in cash from its operations.

Cash Burn

This has led Amazon to have a cash burn of around $33 billion.

Debt

Amazon increased its long-term debt to $65.6 billion at the end of 2025 to $173.1 billion by September 2026.

Cash Reserves

Amazon reduced its cash reserves to around $87 billion to $56 billion.

Amazon’s AI Infrastructure and AWS Growth

The main reason of Amazon’s spending is the investment in artificial intelligence and cloud technology. Amazon Web Services saw a 39% YoY increase in revenues to around $46 billion. This was the highest growth rate in nearly 5 years.

However, CEO Andy Jassy defended this investment stating that Amazon expects to spend around $220 billion on capital expenditure in 2026. It is mostly spent on AWS. He also stated that the company will increase its spending even further in 2027. Around one fifth of AWS’ backlog was due to Anthropic’s computing commitments as of June.