AWS grows 39 percent but $77bn capex quarter spooks investors

Amazon spent more than $77 billion on data centers, AI servers, warehouses and other capital expenditure in a single quarter, and its shares fell 7 percent in response. The figure exceeded analyst expectations and pushed the company's trailing-12-month free cash flow to negative $42.4 billion, a swing from the positive $14.8 billion reported for the 12 months ended September 30, 2025.

The cloud business told a different story. Amazon Web Services grew revenue 39 percent year over year to $45.98 billion, beating expectations and recording its fastest growth rate in nearly five years, the company said. AWS operating income reached $17.8 billion, up from $11.4 billion in the third quarter of 2025.

On the earnings call, CEO Andy Jassy said: AWS could reach a trillion dollars in revenue in as little as five years.

What did the overall results show?

Total company revenue came in at $201.9 billion — a miss on both the top line and earnings per share. Amazon also forecast lower-than-expected fourth-quarter retail sales, adding pressure beyond the capex headline.

The quarterly numbers at a glance:

• Total revenue: $201.9 billion, below expectations
• AWS revenue: $45.98 billion, up 39 percent year over year
• AWS operating income: $17.8 billion, up from $11.4 billion in Q3 2025
• Quarterly capex: more than $77 billion, above expectations
• Trailing free cash flow: negative $42.4 billion

In plain words: the cloud engine is accelerating, but the rest of the business missed while spending accelerated.

How much will Amazon spend this year?

The company said it expects total 2025 capital expenditure to stay in the $220 billion range it first shared in July. Last year, Amazon spent $128 billion. The jump to roughly $220 billion reflects a near-doubling of investment in a single year, driven primarily by AI infrastructure costs.

Amazon frames the outlay as capacity for demand it says it can see. Investors on Thursday treated the same numbers as a cash-flow risk. The negative $42.4 billion free cash flow figure is the mechanical result: heavy capex now, returns later, if at all.

Where does Amazon stand among the hyperscalers?

The market reaction was not uniform across the big three cloud providers. Google, Amazon's closest infrastructure rival, saw an even sharper decline after its own cash flow turned negative and AI began eating into its search revenue. Microsoft moved the other way: it reported positive free cash flow of $18.63 billion, and its shares rose.

The divergence shows the market is no longer penalizing AI spend indiscriminately. Companies that pair heavy investment with visible cash generation are being rewarded; those where the spend squeezes core revenue are not.

AWS's 39 percent growth — the fastest in nearly five years — is the strongest argument Amazon has that its $220 billion bet is funding real demand. Jassy's trillion-dollar, five-year revenue projection for AWS extends that case into the 2030s.

Thursday's 7 percent share drop says investors want the proof before the payout.