Amazon Cloud Grows 39% but AI Costs Leave $42.4 Billion Cash Gap

Amazon reported third-quarter cloud revenue growth of 39%, but surging AI spending and slowing e-commerce growth led to a roughly 7% drop in after-hours trading, with a free cash flow deficit of $42.4 billion over the past year. Total revenue rose 12% to $201.9 billion, below analyst expectations, while net income was $20.7 billion. AWS revenue hit $46 billion, accelerating for six straight quarters, though analysts had hoped for even faster growth. The company maintained its $220 billion capital expenditure forecast for the year, primarily for AI data centers, with CEO Andy Jassy signaling further increases in 2027. Online store revenue grew only 2% to $68.5 billion, the smallest gain since early 2023, and advertising growth slowed to 11%. The company attributed some weakness to shifting Prime Day promotions to June, but analysts also cited softer consumer spending and advertiser demand.