Amazon’s free cash flow turned negative in 2026: over the twelve months to 30 September 2026 it was an outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier. Operating cash flow rose 29% to $168.3 billion, but purchases of property and equipment (net of proceeds and incentives) rose to $210.7 billion, which Amazon says primarily reflects investments in artificial intelligence. Amazon defines free cash flow as cash flow from operations minus those net purchases.
Free cash flow is cash flow from operations reduced by purchases of property and equipment, net of proceeds from sales and incentives. Amazon reports it on a trailing twelve-month basis in every earnings release.
Operating cash flow was $139.5 billion in 2025, up 20%, and $168.3 billion in the twelve months to September 2026, up 29%. It includes cash from retail, third-party seller services, advertising, subscriptions and AWS.
03
The spending
Net purchases of property and equipment were $77.7 billion in 2024, $128.3 billion in 2025 and $210.7 billion in the twelve months to September 2026. Amazon expects 2026 cash capital expenditures of about $220 billion.
04
The result
Free cash flow was $36.8 billion in 2023, $38.2 billion in 2024 and $11.2 billion in 2025, then turned negative: minus $7.6 billion in the twelve months to June 2026 and minus $42.4 billion to September 2026.
What changed in 2025-26
AI data centres drive the outflow
Amazon attributes the year-over-year increase of $94.8 billion in net purchases of property and equipment, in the twelve months to September 2026, primarily to investments in artificial intelligence.
AWS is growing into the spending
AWS sales rose 39% to $46.0 billion in the third quarter of 2026, with segment operating income of $17.8 billion; Amazon cites a $184 billion annualized revenue run rate.
Borrowing to bridge the gap
Amazon received $115.1 billion of proceeds from long-term debt in the nine months to September 2026 and had $162.5 billion of unsecured senior notes outstanding at 30 September 2026.
Net income was $134.8 billion over the twelve months to September 2026, lifted by gains on its Anthropic investment, while free cash flow was negative. In Q2 2026 Amazon also invested $5.0 billion in Anthropic preferred stock.
Amazon free cash flow by year (Amazon's definition)
Use Amazon's own definition when you compare periods; gross capital expenditure gives a lower free cash flow than the net figure Amazon reports.
Read free cash flow next to operating cash flow; in 2026 the fall comes from spending, not from a weaker cash engine.
Track AWS growth against capital spending; the spending pays off only if AI demand fills the new capacity.
Separate investment gains from cash: Anthropic revaluations lifted net income but brought in no operating cash.
Watch new debt issuance; a company with negative free cash flow funds buybacks, deals and capacity from its balance sheet.
The Business Engineer lens
Amazon is turning a cash-generating retailer and cloud business into a capital-heavy AI infrastructure company, and free cash flow shows the cost before the revenue arrives. The Business Engineer view is that the test is AWS’s return on that capacity: if growth keeps pace, today’s outflow is an investment; if not, it is a margin problem.
Net purchases of property and equipment rose by $94.8 billion year over year, which Amazon says primarily reflects investments in artificial intelligence.
The complete explainer, cleaned up and reformatted for mobile.
In short
Amazon generated $139.5B of operating cash flow in 2025 but spent $131.8B on property and equipment. Free cash flow over the twelve months to June 2026 turned negative, at $-7.6B, from $18.2B a year earlier.
Sources: Amazon Form 10-K for 2025 and Q2 2026 earnings release (SEC EDGAR). Analysis by The Business Engineer.
How we source: figures on this page come from the company’s own filings (SEC 10-K, 10-Q and earnings releases, or its annual report), with the period stated next to each number. Last refreshed October 2026. Our methodology.
A 3-minute explainer of Amazon's business model and latest numbers, built from its SEC filings. Analysis by The Business Engineer.
Operating cash flow minus capital expenditures, representing true discretionary cash
Excludes non-cash charges like depreciation and amortization that affect net income
Reflects Amazon’s investment intensity in infrastructure and long-term competitive positioning
Highly sensitive to capital spending cycles in fulfillment, data centers, and technology
Influenced by working capital changes across retail, AWS, and advertising segments
Critical metric for evaluating sustainability of growth investments and shareholder value creation
How Amazon Free Cash Flow Works
Amazon’s free cash flow calculation begins with operating cash flow, which includes cash collected from customer sales, subscription revenues, advertising fees, and AWS services. Operating cash flow then accounts for cash paid to suppliers, employees, vendors, and for general operating expenses across all business segments. Capital expenditures, the second critical component, represent Amazon’s substantial investments in building and maintaining its competitive moat through infrastructure spending.
Capital Expenditure Subtraction: Property, plant, and equipment purchases for fulfillment centers, data centers, transportation infrastructure, and technology systems reduce free cash flow despite supporting future revenue generation
Reinvestment Cycle: A portion of free cash flow is reinvested into emerging initiatives like one-day delivery expansion, grocery chain automation (Amazon Fresh expansion), and AI capability development through partnerships and internal R&D
Amazon Free Cash Flow in Practice: Real-World Examples
Comparative Analysis: Amazon Versus Walmart and eBay
AWS Contribution to Amazon Consolidated Free Cash Flow
Why Amazon Free Cash Flow Matters in Business
Evaluating Long-Term Competitive Sustainability and Innovation Capacity
Strategic Capital Allocation and Shareholder Return Decisions
Investment Thesis Validation and Business Model Risk Assessment
Advantages and Disadvantages of Amazon Free Cash Flow Analysis
Advantages
Free cash flow captures true economic cash generation independent of accounting policy differences (depreciation timing, stock-based compensation treatment), enabling accurate comparison between Amazon, Walmart, and eBay
Reveals management’s true capital intensity priorities by documenting actual cash spent on fulfillment centers, data centers, and technology infrastructure versus management’s narrative about growth investments
Enables validation of whether operating leverage improvements (AWS margin expansion, advertising revenue acceleration) are generating incremental cash flows or being absorbed by higher tax payments and working capital requirements
Provides leading indicator of balance sheet strength and dividend/buyback capacity more reliable than net income which masks non-cash charges and one-time gains
Disadvantages
Differences in capital allocation methodology between companies (Amazon’s asset-light marketplace model components versus owned fulfillment networks) make free cash flow comparisons between Amazon and eBay potentially misleading without detailed adjustment for business model differences
Key Takeaways
Amazon in charts
Amazon's operating income hit $80B in 2025, up from $4.2B in 2016. Source: Amazon Form 10-K filings via SEC EDGAR XBRL company facts. Analysis by The Business Engineer.Drawing by The Business Engineer.Amazon spent $132B on property and equipment in 2025, almost all of its $140B of operating cash flow. Source: Amazon Form 10-K filings via SEC EDGAR XBRL company facts (gross purchases of property and equipment); TTM free cash flow from the Q2 2026 earnings release. Analysis by The Business Engineer.
The business throws off more cash than ever: operating cash flow rose from $84.9B in 2023 to $139.5B in 2025. What changed is spending. Capital expenditure went from $52.7B in 2023 to $131.8B in 2025, and to $169.0B over the twelve months to June 2026.
Most of that is data centres and chips for AWS and AI. Amazon is betting that AWS demand, which grew 37% in Q2 2026, will pay back the build-out; until it does, free cash flow stays under pressure.
This is the same pattern as 2021–2022, when Amazon doubled its logistics network, and opposite to 2023–2024, when it cut capex and free cash flow recovered. See Amazon profits and the AWS business model.
Amazon free cash flow represents the cash generated from operating activities minus capital expenditures required to maintain and expand its infrastructure — as explored in the economics of AI compute infrastructure — , including data centers, fulfillment networks, and technology platforms. This metric reveals how much cash Amazon can deploy toward debt reduction, shareholder returns, acquisitions, or reinvestment in growth initiatives.
Free cash flow differs fundamentally from net income because it captures actual cash movement rather than accounting profits. Understanding Amazon’s free cash flow dynamics is essential for investors, competitors, and stakeholders evaluating the company’s financial health and strategic priorities within the context of its diversified business model spanning e-commerce, cloud computing, advertising, and subscription services.
AWS made 18% of Amazon's 2025 sales but 57% of its operating income. Source: Amazon quarterly earnings releases (Form 8-K, SEC EDGAR); full-year 2025 = sum of four quarters (ties to Form 10-K net sales). Shares calculated. Analysis by The Business Engineer.
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.
