Amazon reported a negative free cash flow of $7.6 billion for the second quarter of 2026, even as operating cash flow increased by 33% year-over-year. The gap is largely attributed to the company's massive investments in artificial intelligence infrastructure, including data centers and custom chips.
According to the company's earnings release, operating cash flow rose to $34.2 billion, but capital expenditures surged to $41.8 billion, driven by AI-related projects. This marks a significant shift from the previous year when free cash flow was positive.
CEO Andy Jassy emphasized that the AI investments are necessary to support the growth of Amazon Web Services (AWS) and its generative AI offerings. He noted that the company is seeing strong demand for AI services, which justifies the increased spending.
Analysts have mixed reactions, with some concerned about the near-term cash flow impact, while others view it as a strategic move to maintain AWS's competitive edge against rivals like Microsoft and Google. Amazon's stock experienced slight volatility following the announcement.
The company expects capital expenditures to remain elevated through 2026 as it continues to expand its AI capabilities. Amazon also reaffirmed its full-year guidance, indicating that it expects to return to positive free cash flow in 2027.
