Amazon Reports Negative Free Cash Flow but Shares Rise Over 15%
Despite reporting a negative free cash flow of $7.6 billion for the trailing twelve months—down sharply from an inflow of $18.2 billion in the prior year—Amazon's stock rose nearly 15% following its Q2 earnings release. The drop was driven by increased capital expenditures, which reached $169 billion over the past year and are expected to grow further due to AI investments. Investors appeared unfazed because Amazon’s operating cash flow hit a record high of $161.4 billion for the same period, showing strong underlying business performance. Revenue across all segments grew significantly in Q2, with AWS leading at 37% year-over-year growth and improving profitability. CEO Andy Jassy highlighted continued expansion plans due to rising memory costs. The market focused on Amazon’s long-term potential rather than short-term cash flow concerns. While the reported net income was inflated by non-operating gains from AI investments, operating income grew substantially—particularly in AWS—which accounted for 60% of total operating profit.
Tickers: $AMZN
Topics: AI investments capital spending free cash flow operating cash flow