Amazon will report its third-quarter earnings after the closing bell on Thursday, with analysts predicting strong growth in cloud revenue and Wall Street looking for commentary on the company's AI spending.
In July, Amazon reported negative free cash flow of $7.6 billion over the trailing twelve months, compared with positive $18.2 billion a year earlier. The company raised its 2026 capital expenditure forecast to $220 billion, with analysts surveyed by StreetAccount projecting that capex will top $280 billion in 2027.
Analysts expect Amazon Web Services revenue to hit $45.48 billion in the quarter, a 38 percent gain from a year earlier, which would mark a fifth consecutive quarter of acceleration. CEO Andy Jassy has said the company's cloud capacity is largely sold out for next year and a good chunk of 2028 is sold out.
Amazon's aggressive spending has eaten into its cash flow. The current quarter is expected to see an outflow of $9.9 billion, according to FactSet estimates. Amazon has also trimmed headcount: the company has laid off more than 57,000 staffers since 2022, including job cuts on Wednesday in its device software and services team. Fewer than 250 employees were let go as a result of the job cuts, the company said.
Amazon has blocked third-party AI agents from accessing its site. It blocked Meta's Muse agent from shopping on its platform, saying it was not given advance notice, and has sued Perplexity over allegations it concealed AI bots. At the same time, Amazon is investing in its own AI shopping tools: more than 400 million shoppers have used its Alexa for Shopping assistant, and the number of people using its agentic features has grown more than eight times since the start of the year. 'The key question is whether Amazon can accommodate third-party agents on terms that preserve attractive monetization,' Deutsche Bank analysts wrote in a note last week.
Analysis
Why This Matters
- Amazon's earnings will show whether its AI investment strategy is paying off or overextending the company's finances.
- The report comes as all major hyperscalers report negative or declining free cash flow, raising questions about sustainability of the AI build-out.
- Amazon's stance on third-party shopping agents could shape how e-commerce interacts with AI assistants, with broad implications for digital advertising and competition.
Background
Amazon is a leading cloud provider through its AWS division and has been investing tens of billions in data centers to meet demand for AI computing. The company's capital expenditure has surged, and its free cash flow has turned negative, a dynamic now seen across most of the hyperscaler industry. Amazon also operates the largest online marketplace and has developed its own AI shopping tools.
Key Perspectives
Analysts (StreetAccount): Expect AWS revenue to rise 38 percent year-on-year in Q3, accelerating for a fifth consecutive quarter, but warn that capex could exceed $280 billion by 2027.
CEO Andy Jassy: Says Amazon's cloud capacity is largely sold out for 2025 and a good chunk of 2028 is already committed, signaling sustained demand.
Amazon: Says it blocked Meta's Muse agent because it was not given advance notice, consistent with a policy of blocking unauthorized third-party agents.
Deutsche Bank analysts: Expect Amazon to eventually develop its own agentic shopping offering and question whether third-party access can be accommodated on commercial terms that retain monetisation.
What to Watch
- Whether Amazon raises its capex forecast for 2027 or beyond, signaling continued or moderated AI investment.
- The trajectory of free cash flow: whether it stabilises or deteriorates further.
- How Amazon balances blocking third-party agents with developing its own tools, and whether competitors like Meta and OpenAI gain ground in AI shopping.
Checked
12 claims in this story checked against 1 source: 11 supported.
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- SupportedAmazon is set to report third-quarter earnings after the bell on Thursday, as its AI spending faces scrutiny.US Top News and Analysis: “Amazon is slated to report third-quarter earnings results after the bell on Thursday. ... Wall Street will be listening for any commentary from Amazon executives around AI spending.”
- SupportedAWS growth is expected to accelerate as Amazon's AI spending draws scrutiny.US Top News and Analysis: “AWS sales are predicted to grow 38%, according to StreetAccount, compared with a 37% gain last quarter. It would mark AWS's fifth consecutive quarter of revenue acceleration. ... Wall Street will be listening for any commentary from Amazon executives around AI spending.”
- SupportedAnalysts predict strong cloud revenue growth, and Wall Street is looking for commentary on Amazon's AI spending.US Top News and Analysis: “Investors expect to see robust growth in Amazon's cloud segment. ... Wall Street will be listening for any commentary from Amazon executives around AI spending.”
- SupportedIn July, Amazon reported negative free cash flow of $7.6 billion over the trailing 12 months, versus positive $18.2 billion a year earlier.US Top News and Analysis: “In July, the company reported negative free cash flow of $7.6 billion for the trailing twelve months, compared with positive free cash flow of $18.2 billion one year earlier.”
- SupportedAmazon raised its 2026 capital expenditure forecast to $220 billion, and StreetAccount-surveyed analysts expect capex to exceed $280 billion in 2027.US Top News and Analysis: “Last quarter, the company hiked its capital expenditure forecast for 2026 to $220 billion, up from $200 billion. Analysts surveyed by StreetAccount expect Amazon's capex to creep up more than $280 billion in 2027.”
- SupportedAWS revenue is expected to be $45.48 billion, up 38% year over year, marking a fifth consecutive quarter of revenue acceleration.US Top News and Analysis: “Amazon Web Services: $45.48 billion, according to StreetAccount ... AWS sales are predicted to grow 38%, according to StreetAccount ... It would mark AWS's fifth consecutive quarter of revenue acceleration.”
- SupportedAndy Jassy said Amazon's cloud capacity is largely sold out for next year and a good chunk of 2028 is sold out.US Top News and Analysis: “CEO Andy Jassy said Amazon's cloud capacity is "largely sold out" for next year, and it's received significant commitments for 2028 as well. ... "A good chunk of '28 is sold out."”
- SupportedFactSet estimates an outflow of $9.9 billion in the current quarter.US Top News and Analysis: “It's expected to be cash flow negative in the current quarter, with an outflow of $9.9 billion, according to FactSet estimates.”
- SupportedAmazon has laid off more than 57,000 staff since 2022 and made Wednesday cuts in its device software and services team, with fewer than 250 employees let go in those cuts, according to the company.US Top News and Analysis: “The company has laid off more than 57,000 staffers since 2022 ... The company on Wednesday laid off some staffers in its device software and services team ... Fewer than 250 employees were let go as a result of the job cuts, the company said.”
- SupportedAmazon blocked Meta's Muse agent from shopping on its platform, saying it had not received advance notice, and sued Perplexity over allegations it concealed AI shopping bots.US Top News and Analysis: “The company said it was not given advance notice that Muse would access its webstore, and it never agreed to participate. ... the company sued last year over allegations that the startup concealed its AI shopping bots.”
- Partly supportedMore than 400 million shoppers have used Alexa for Shopping, and use of its agentic features has grown more than eight times since the start of the year.US Top News and Analysis: “On Thursday, Amazon said more than 400 million shoppers have used the assistant, and the number of people using Alexa for Shopping's agentic features has "grown more than eight times since the start of the year."”
- SupportedDeutsche Bank analysts wrote, "The key question is whether Amazon can accommodate third-party agents on terms that preserve attractive monetization," in a note last week.US Top News and Analysis: “"The key question is whether Amazon can accommodate third-party agents on terms that preserve attractive monetization."”
