Amazon’s third-quarter earnings release, filed with the SEC on 29 October 2026, shows $77.3 billion of purchases of property and equipment in the quarter to 30 September, against $42.4 billion of cash from operations.
By our arithmetic, that is capital spending of about 1.8 times operating cash flow in a single quarter. The same cash flow statement shows $48.1 billion of proceeds from long-term debt in the quarter, against none a year earlier.
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The key insight: By our arithmetic, Amazon spent about 1.8 times its operating cash flow on property and equipment in the third quarter, and its cash flow statement shows $48.1 billion of new long-term debt in the same quarter.
Purchases of property and equipment were $77,259 million in the third quarter, against $35,095 million a year earlier; by our arithmetic, about 2.2 times. Net cash from operating activities was $42,422 million, against $35,525 million.
A year ago the two lines were roughly level. By our arithmetic, capital spending was about 0.99 times operating cash flow in the third quarter of 2025, and about 1.82 times in the third quarter of 2026.
Amazon’s release puts trailing twelve-month free cash flow at an outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier, “driven primarily by a year-over-year increase of $94.8 billion in purchases of property and equipment, net of proceeds from sales and incentives”. It adds: “This increase primarily reflects investments in artificial intelligence”.
Amazon, quarter to 30 September: operating cash flow, gross purchases of property and equipment, and proceeds from long-term debt, 2025 against 2026. The 1.8x ratio is our arithmetic. Source: Amazon Q3 2026 earnings release (SEC 8-K Exhibit 99.1, 29 October 2026).
Key Updates: ๐น Anthropic: $9.5B pre-tax gain in Q3โ25 included in non-operating income ๐น AWS: $184B annualized revenue run rate; over 39% YoY growth ๐น AgentCore: Tens of thousands of customers; 2x more agents deployed in Q3 ๐น Alexa for Shopping: 400M+ customers; interactions up 570% YoY
Comments: ๐ธ โOur AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenuegrowth in Q3 ($184 billion revenue run rate) and projected revenuegrowth rates of over 40% both in 2027 and in 2028โ
Wall St Engine on X, 29 Oct, summarising the quarter: capex of $77.3B against an estimate of $57.47B, trailing twelve-month free cash flow of -$42.4B, and the $9.5B pre-tax Anthropic gain that was in Q3’25 non-operating income.
The Debt Line
Proceeds from long-term debt were $48,102 million in the third quarter and $115,100 million in the first nine months of 2026. Long-term debt on the balance sheet rose from $65,648 million at 31 December 2025 to $173,125 million at 30 September 2026; by our arithmetic, an increase of about $107.5 billion.
Interest expense was $1,691 million in the quarter, against $538 million a year earlier; by our arithmetic, about 3.1 times. Cash, cash equivalents and marketable securities were $114.2 billion at 30 September, against $123.0 billion at the end of 2025, by our arithmetic from the balance sheet.
Amazon, Google and Microsoft Side by Side
Our piece on capex against operating cash covered Alphabet’s $51.4 billion of third-quarter property and equipment purchases against $42.3 billion of operating cash, and Microsoft’s ratio of 68%. By our arithmetic, Alphabet’s ratio was about 1.2 times; Amazon’s, at about 1.8 times, is the highest of the three.
Alphabet reported trailing twelve-month free cash flow of $19.7 billion and a third-quarter figure of negative $9.1 billion, as covered in our piece unpacking Google’s $507 billion drop. By our arithmetic, Amazon’s third-quarter free cash flow on its own definition, operating cash flow less purchases net of $1,381 million of proceeds and incentives, was about negative $33.5 billion.
The Anthropic Line Went Quiet
Other income was a net expense of $703 million in the third quarter, against income of $10,186 million a year earlier. Amazon’s release says the year-earlier quarter “included” pre-tax gains of $9.5 billion “in non-operating income (expense) from our investments in Anthropic”, and that this is the main reason net income fell to $20.7 billion from $21.2 billion.
Other income for the first nine months of 2026 was $68,359 million. The release does not attribute any third-quarter 2026 gain or loss to Anthropic. Alphabet, by contrast, booked an $8.2 billion other-income loss in its third quarter, mainly from its SpaceX stake, as covered in the same Google piece.
Other assets on the balance sheet rose from $122,607 million at the end of 2025 to $358,775 million at 30 September; the release does not break that line down. Our Amazon preview set out the baselines this piece compares against, and our piece on data center bond yields near 7% covers what borrowing for the build now costs.
The Structural Read
As we read the statements, the gap between capital spending and operating cash in the quarter was about $34.8 billion by our arithmetic, and the debt raised in the quarter was larger than that gap.
By our arithmetic, Amazon’s ratio of capital spending to operating cash, about 1.8 times, is higher than Alphabet’s, about 1.2 times, and Microsoft’s 68%.
As we read the income statement, the year-earlier quarter included $9.5 billion of pre-tax Anthropic gains, while the release attributes no Anthropic gain to this quarter.
Amazon Q3 2026 earnings release
“This increase primarily reflects investments in artificial intelligence”
Three Implications
FOR INVESTORS By our arithmetic, interest expense of $1,691 million in the quarter was about 3.1 times the year-earlier $538 million.
FOR CREDIT MARKETS Long-term debt rose from $65,648 million at the end of 2025 to $173,125 million at 30 September 2026, by our arithmetic about $107.5 billion.
FOR READERS TRACKING FREE CASH FLOW The release puts trailing twelve-month free cash flow at an outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier.
The framework sets out to map the financing of AI: “How the money flows, where it cracks, what it buys, who can absorb it, and what happens when revenue can’t catch up.”
As we read it, Amazon’s third quarter speaks to the “who can absorb it” part: operating cash covered a little over half of the quarter’s capital spending, and the release shows new long-term debt alongside it. The framework was published in May 2026 and does not discuss this quarter.
What Is Not Established
The release does not split capital spending between AWS and the rest of Amazon, does not say how the $48.1 billion of debt was used, and does not explain the rise in other assets. Amazon’s 10-Q, not yet read for this piece, may add detail. Ratios, differences and free cash flow for the single quarter are our arithmetic from the release’s tables.
This Week In The AI Supercycle
Execution Fault Lines, Concentrated Demand, and Geopolitical Firewalls
This week’s issue: the AI build is not short of demand for its parts. It is short of cheap money, and its end revenue rests on a narrow base of large, often venture-funded buyers.
Amazon’s third-quarter release shows $77.3 billion of capital spending against $42.4 billion of operating cash, about 1.8 times by our arithmetic, and $48.1 billion of new long-term debt in the same quarter.
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A note on sourcing. Every Amazon figure comes from its third-quarter 2026 earnings release, filed with the SEC on 29 October 2026 as Exhibit 99.1 to a Form 8-K. Alphabet and Microsoft figures come from our earlier coverage of their releases. Ratios, differences and single-quarter free cash flow are our arithmetic. Amazon’s 10-Q had not been read for this piece.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
