Amazon expects capital spending in 2027 to exceed its approximately $220 billion plan for 2026, even as Amazon Web Services posted its fastest revenue growth in nearly five years. The outlook, discussed after the company’s October 29 earnings announcement, shows how aggressively Amazon is expanding the infrastructure behind cloud computing and artificial intelligence.
AWS revenue rose 39.3% year over year to approximately $46 billion in the third quarter of 2026. But Amazon also reported a $42.4 billion free-cash-flow outflow over the trailing 12 months, highlighting the financial demands of building new computing infrastructure.
Amazon’s approximately $220 billion figure refers to company-wide cash capital expenditures expected in 2026. CEO Andy Jassy said spending would be meaningfully higher in 2027, but Amazon has not disclosed a precise 2027 total. Neither amount should be described as spending exclusively on AI or AWS.
- Amazon’s 2027 Spending Outlook Signals More AI Infrastructure Growth
- AWS Revenue Climbs 39% to Nearly $46 Billion
- The Financial Cost: $42.4 Billion in Negative Free Cash Flow
- What the Spending Means for Servers, Accelerators and Power
- The Wider AI Infrastructure Race
- What Comes Next for AWS?
- Related Infrastructure Reporting
Amazon’s 2027 Spending Outlook Signals More AI Infrastructure Growth
In its official third-quarter earnings release, Amazon reaffirmed that it expects cash capital expenditures of approximately $220 billion in 2026.
During the subsequent conference call, Jassy told analysts that capital spending would be meaningfully higher next year, according to Reuters’ October 29 reporting.
The company did not specify how much of the 2027 budget would be allocated to individual AWS regions, AI accelerators, networking equipment, data-center construction or non-cloud operations.
AWS Revenue Climbs 39% to Nearly $46 Billion
Amazon Web Services generated $45.98 billion in third-quarter sales, compared with $33.01 billion a year earlier.
The 39.3% growth rate represents the cloud division’s strongest year-over-year expansion in nearly five years. AWS operating income also increased from approximately $11.4 billion to $17.8 billion.
Year-over-year growth: 39.3%. Source: Amazon Q3 2026 results. Bars compare actual reported quarterly sales, rounded to one decimal place.
Amazon reported an approximately $184 billion annualized AWS revenue run rate. That is calculated by multiplying the latest quarterly revenue by four; it is not the same as revenue already earned over a full year.
The cloud business generated about 23% of Amazon’s consolidated quarterly revenue but approximately 63% of its operating income, based on the company’s reported segment figures.
This disparity helps explain why Amazon is willing to commit such substantial capital to expanding AWS capacity: its cloud division contributes a disproportionately large share of group operating profit.
The Financial Cost: $42.4 Billion in Negative Free Cash Flow
The scale of Amazon’s infrastructure expansion is particularly visible in its cash-flow figures.
Over the 12 months ended September 30, 2026, Amazon reported free cash flow of negative $42.4 billion, compared with positive $14.8 billion in the preceding comparable period.
Amazon attributed much of the deterioration to a $94.8 billion year-over-year increase in purchases of property and equipment, net of proceeds from sales and incentives. The company said this increase primarily reflected investment in artificial intelligence.
| Metric | Value | Period |
|---|---|---|
| AWS revenue | $46.0B | Q3 2026 |
| AWS revenue growth | 39.3% | Year over year |
| AWS operating income | $17.8B | Q3 2026 |
| Group operating income | $28.1B | Q3 2026 |
| Free cash flow | -$42.4B | Trailing 12 months |
| Cash capital expenditures | ~$220B | 2026 guidance |
| 2027 capital expenditures | Above 2026 | Exact total not disclosed |
Negative free cash flow does not mean Amazon reported a net accounting loss. The company remained profitable, posting $20.7 billion in quarterly net income. The cash-flow figure instead highlights how heavily capital investment is absorbing the cash generated by operations.
What does capital expenditure mean for a data-center operator?
Capital expenditure, or capex, is spending on assets expected to provide benefits over multiple years. In cloud infrastructure, relevant assets can include buildings, servers, accelerators, electrical systems, network equipment and cooling systems.
Capex is not equivalent to a single quarter’s operating expenses or the amount immediately recognized as an expense in the income statement.
Amazon’s reported company-wide capital spending also covers activities outside AWS, so the full amount cannot be assigned to data centers without a more detailed breakdown.
What the Spending Means for Servers, Accelerators and Power
Expanding AI computing capacity requires several infrastructure investments to progress together. Acquiring more accelerator chips is only one part of the work.
Data-center developers must also secure suitable sites, electrical grid connections, power-distribution systems, cooling equipment and networking capacity before new servers can operate at scale.
One important variable is accelerator efficiency. Amazon continues to invest in its own Trainium chips and associated development software, while AWS also supports customer workloads using third-party AI hardware.
The company highlighted TorchNeuron in its October earnings announcement as part of its efforts to make Trainium more accessible to developers using existing PyTorch applications.
The Wider AI Infrastructure Race
Amazon’s investment outlook also matters because major AI developers are signing long-term cloud computing agreements that require substantial physical capacity.
An October filing by Anthropic disclosed approximately $269.4 billion in minimum cloud compute commitments across Amazon, Google and Microsoft. Those figures represent multi-year contractual obligations, not spending already completed or equipment already installed.
Electricity availability is another potential constraint. Norway’s energy regulator recently outlined a scenario in which data-center electricity consumption could reach 25 TWh annually by 2035 , depending on how many grid-reserved projects become operational.
Other cloud providers are pursuing different expansion strategies. European operator OVHcloud reported 110 MW of unused grid-connected electrical capacity that may support future cloud and AI deployments within its existing infrastructure portfolio.
Together, these developments underline a distinction between announced investment, secured electricity capacity and computing infrastructure actually available to customers.
What Comes Next for AWS?
Amazon expects AWS revenue growth above 40% in both 2027 and 2028, according to management’s outlook included in the earnings announcement. Those figures are projections rather than guaranteed outcomes.
For cloud customers and infrastructure providers, several developments will determine how effectively the spending translates into usable capacity:
- Regional availability: where new AWS capacity becomes commercially accessible.
- Accelerator supply: the balance between proprietary Trainium platforms and other AI chips.
- Power and cooling: whether new facilities can secure and commission the physical infrastructure required for high-density workloads.
- Financial returns: whether growing cloud revenue and operating income can eventually offset the extraordinary pace of capital investment.
The central question is no longer simply how much Amazon can spend. It is how quickly that spending can become operational cloud capacity, support paying workloads and generate sufficient cash returns.
With the precise 2027 capital spending total still undisclosed, the next financial updates will provide a clearer measure of how far Amazon intends to extend its AI infrastructure expansion.
