AWS is the healthiest part of this report, but the cash going out the door to keep it growing, along with narrow Q3 revenue and EPS…
AWS is the healthiest part of this report, but the cash going out the door to keep it growing, along with narrow Q3 revenue and EPS misses, has $AMZN down 6.35% premarket at $228.30 on Oct 30, after a 4.25% drop to $243.79 on Oct 29. Demand looks fine to me. Paying for it is the open question.
- AWS net sales came in at $45.98B, up 39.3% year over year, which Amazon calls its fastest growth in nearly five years. Operating income was $17.77B, a 38.7% margin.
- Trailing-12-month free cash flow swung to a $42.4B outflow. Net property and equipment purchases rose $94.8B year over year, mostly for AI investment, according to Amazon.
- Amazon kept its roughly $220B 2026 cash capex guide. Q3 revenue of $201.94B and EPS of $1.89 narrowly missed consensus of $202.31B and $1.96.
- Q4 revenue guidance is $240B to $247B. I'll be watching whether capex intensity starts easing against that range.
This reminds me of the fiber and telecom buildout, where demand was real and the spending still ran ahead of the cash. Amazon is big enough to carry it, so I care more about whether AWS growth turns into free cash flow over the next few quarters. I could be wrong on timing, but one strong cloud quarter isn't enough to change my mixed view on AI capex. That changes when cash flow improves across most AI names.
Sources:
The Codew — Daily Tech Briefing: https://www.thecodew.com/2026/10/daily-tech-briefing-october-30.html
AP via Rutland Herald: https://www.rutlandherald.com/news/business/ap-business-summarybrief-at-2-01-a-m-edt/article_18197bff-9b86-5432-b0c2-bec690006c64.html
Not financial advice. For informational and educational purposes only.
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