AWS grows 39% and Amazon will spend even more on AI in 2027

Amazon chief executive Andy Jassy at an Amazon fireside chat.

Amazon’s free cash flow fell to minus $42.4bn over the 12 months to September. Spending on AI drove most of the drop, the company said on Thursday. A year earlier it was a positive $14.8bn.

The Amazon Q3 earnings showed revenue up 12% to $201.9bn and operating income up to $28.1bn, from $17.4bn a year earlier. Its operating margin of 13.9% was the highest Amazon has ever reported. Purchases of property and equipment rose by $94.8bn over the 12 months, mostly for AI, the company said.

Shares fell as much as 7% in extended trading on Thursday, Reuters reported. Revenue and earnings per share came in below analysts’ forecasts of $202.3bn and $1.96, CNBC reported.

Revenue at Amazon Web Services rose 39% to $46bn, and its operating income climbed to $17.8bn from $11.4bn. The cloud unit now has an annual revenue run rate of $184bn and a backlog of $578bn, Jassy said.

“We’re installing an AI accelerator about every 14 seconds, and almost as fast as we install capacity, customers are gobbling it up,” Jassy said on the call.

He expects AWS revenue to grow more than 40% in both 2027 and 2028. Late in 2027, Amazon also plans to start selling its Trainium AI chips outside AWS, he said. Earlier this month it released TorchNeuron for Trainium, so developers can run PyTorch code on the chips.

“There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years,” Jassy said in the results statement.

Amazon spent $77.3bn on property and equipment in the third quarter, against $35.1bn a year earlier. It still expects about $220bn of cash capital spending this year, a figure it set in July’s results. It raised $48.1bn of long-term debt in the quarter. A filing after the results showed it can now borrow up to $80bn against the AI hardware it buys.

Jassy told analysts that Amazon expects to spend “meaningfully more” in 2027, with what he called a clear line of sight to attractive returns.

The retail side grew more slowly. Online store sales rose 2% to $68.5bn, and advertising revenue rose 11% to $19.6bn. Prime Day moved into the second quarter in most large countries this year. That cut about four percentage points from total growth, Amazon said. Jassy said Prime Video now has a revenue run rate in the tens of billions of dollars and is profitable.

For the holiday quarter, Amazon expects revenue of $240bn to $247bn and operating income of $28.5bn to $33.5bn. Its rivals reported the day before: Google Cloud revenue doubled, while Alphabet shares had their worst day on record.

Cristian Dina is the CRO at The Next Web. He has interviewed 300+ industry leaders and authored the book King of Networking, establishing hi (show all) Cristian Dina is the CRO at The Next Web. He has interviewed 300+ industry leaders and authored the book King of Networking, establishing himself as one of the most connected and respected voices in the ecosystem. At just 23 years old, Cristian was included in the Forbes 30 Under 30 2025 list, representing a new generation of tech builders, bold thinkers who move fast, build with purpose, and create real impact.

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