Amazon's AI Data Center Spending Strains Balance Sheet Ahead of Holidays

Amazon's AI data center construction costs caused cash flow to nearly sextuple to $42.4 billion in the last quarter, sending shares down about eight percent in after-hours trading. The investment surge is straining the company's balance sheet ahead of the holiday season. The cash outflow, up from roughly $7 billion, reflects Amazon's plan to spend $220 billion on AI infrastructure this year. Rivals Google and Meta also reported negative free cash flow, while Microsoft alone saw positive inflows of $18.6 billion. Amazon CEO Andy Jassy pledged even higher investments next year, citing AWS growth of 39 percent to $46 billion in quarterly revenue. However, slower advertising growth and a weaker-than-expected sales forecast fueled concerns about consumer spending during the holiday period.