EnterpriseAMZNOCT 31, 2026

Amazon AWS grows 39% as AI spending drives $42.4B cash outflow

Cloud demand accelerated while advertising growth slowed, leaving small-business owners with different signals for infrastructure and acquisition budgets.

BY GRETA REINHART · ENTERPRISE SAAS

Amazon reported 39% revenue growth at Amazon Web Services (AWS) on October 29, alongside a $42.4 billion trailing-twelve-month free cash flow outflow. The Q3 2026 results put accelerating cloud demand beside the cost of supplying it, while slowing advertising growth presented small-business owners with a separate customer-acquisition question.

Amazon’s earnings release recorded $201.9 billion in quarterly sales, up 12%. AWS generated $46.0 billion in sales and $17.8 billion in operating income. The release attributed the cash-flow deterioration primarily to increased property and equipment purchases reflecting AI investment. These aren’t interchangeable measures: the cloud business’s operating earnings and Amazon’s cash outflow describe different parts of the investment cycle.

Investors focused on the spending. Reuters reported that shares closed Thursday at $243.79, down 4.3%, before falling as much as 7% in extended trading. The Associated Press described AWS’s expansion as its fastest in nearly five years, with investor attention directed instead toward AI spending and cash use.

In Amazon’s Q3 2026 earnings call, transcribed by The Motley Fool, Andy Jassy, CEO of Amazon, reaffirmed approximately $220 billion in 2026 cash capital expenditures, mostly for AWS. He forecast that spending will be meaningfully higher in 2027. The analytical distinction is between evidence of demand and evidence of cash generation: rapid growth doesn’t resolve the question of how much investment it requires.

Advertising supplied a different signal. Revenue increased 12% to $19.6 billion, below the 18% growth analysts expected, according to Reuters; Axios noted growth of 26% in the preceding quarter. Reuters reported that Jassy attributed part of the weakness to Prime Day moving into the second quarter. He projected that advertising growth will return to the high teens in the fourth quarter. That remains a forecast, not a demonstrated recovery.

For small-team owners, the editorial inference is to evaluate cloud dependence and advertising performance separately. Monitor provider spending and service costs, but don’t treat Amazon’s capital budget as proof that a business’s own cloud bill will change. Assess advertising allocations against the business’s own reach, acquisition costs and customer results rather than Amazon’s aggregate revenue growth. These results alone establish neither changed prices nor changed outcomes for individual customers. Provider growth and customer returns aren’t the same measure.

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About the author

Greta Reinhart

ENTERPRISE SAAS

Greta Reinhart tracks the enterprise software stack from San Francisco — data platforms, AI bundling, seat pricing, and channel checks across the largest SaaS vendors. She files on go-to-market shifts, packaging changes, and quarterly enterprise reads.