📉📉📉 The big tech sale continues: today Amazon is down 10% after the Q3 2026 report.
The funniest part is that in terms of operational numbers, this is one of the best quarters in the company's history. AWS grew by 39% to $46 billion - the fastest growth in almost five years, with a run rate already at $184 billion per year. Operating profit is $28.1 billion compared to $17.4 billion a year ago, with a margin of 13.9% - a record for Amazon. Tokens on Bedrock grew 17 times over the year.
But the market is now looking at a different line. Free cash flow over the past 12 months has gone negative: -$42.4 billion compared to +$14.8 billion a year ago. The reason is that equipment expenses increased by $94.8 billion over the year, and Amazon directly states that this is mainly due to AI. Capex for 2026 is confirmed at around $220 billion.
Plus, revenue of $201.9 billion and EPS of $1.89 slightly missed analysts' expectations ($202.3 billion and $1.96). Net income even decreased, but this is a base effect: a year ago it included a $9.5 billion revaluation of the stake in Anthropic.
The picture is the same as with Alphabet, which has had negative FCF for the second quarter in a row. Money for AI infrastructure is going out now, and revenue from it comes later. Andy Jassy promises AWS growth above 40% in both 2027 and 2028 and says that Amazon could have two trillion-dollar businesses in the next 5-10 years. Investors are not ready to wait and want to see when these $220 billion will start returning as real money.
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