Amazon Raises 2026 Capital Spending Target by $20 Billion Amid Rising Chip Costs
Amazon has increased its capital expenditure target for 2026 from $200 billion to $220 billion, citing rising memory chip prices as a key factor. During the second-quarter earnings call, CEO Andy Jassy declined to specify how Amazon plans to fund this additional spending, stating there was 'nothing to share today.' Despite having recently raised $25 billion through bond sales and previously securing $37 billion in March 2026, investors remain uncertain about its funding strategy. Amazon Web Services (AWS) reported strong second-quarter growth of 37%, with revenue reaching $42.2 billion—surpassing expectations—and both AI and chip businesses now generating over $25 billion annually. However, Amazon's free cash flow turned negative at -$7.6 billion in the trailing twelve months, a sharp decline from positive $18.2 billion a year earlier. The surge in capital spending is part of broader trends across Big Tech as companies like Alphabet and Meta also face shrinking or negative free cash flows due to AI-driven infrastructure investments.
Tickers: $AMZN
Topics: AWS growth capex debt markets funding strategy