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Amazon’s $42.4 Billion Cash Burn Delivers Final Blow In a Rough Week For AI

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Amazon’s $42.4 Billion Cash Burn Delivers Final Blow In a Rough Week For AI

Amazon just reported its third-quarter earnings, which show it’s now the latest AI hyperscaler to disappoint the market with below-expectations revenue and a spiraling cash burn.

The company’s free cash flow sank to a negative $42.4 billion, a huge drop compared to the $7.5 billion cash burn reported in the previous quarter, and an even greater drop compared to the $14.8 billion that was flowing into the company at the same time last year. The cash drop was driven primarily by a $94.8 billion jump in property and equipment purchases related to the company’s investments in artificial intelligence, Amazon said. The company expects to spend $220 billion this year, again driven in large part by AI investments.

But while Amazon hemorrhages cash for AI, its revenue also failed to match up to analyst expectations. The tech giant reported $201.9 billion in revenue, up 12% since last year. That result was below analyst estimates, the Wall Street Journal reported.

The results also showed subpar revenue for its advertising and retail segments, a sign for many investors of a stumble in Amazon’s core business. Amazon’s chief financial officer Brian Olsavsky noted that Prime Day shifted dates this year, so the sales mostly occurred during the company’s second fiscal quarter. Amazon brass argued that last year it was during the third quarter, which slightly impacted the year-over-year growth.

Amazon was the last hyperscaler to report in this round of tech earnings. So far, of the four hyperscalers , only Microsoft has reported positive free cash flow.


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