Amazon Free Cash Flow Plunges, But Stock Rises on AWS Boom
Amazon's recent quarterly earnings report showed a decline in free cash flow, with an outflow of $7.6 billion for the trailing 12 months compared to an inflow of $18.2 billion in the same period last year.
This drop-off has some investors concerned, but the market seems to be taking it in stride, with Amazon's stock price rising by about 15% after the report was released.
The company's operating cash flow actually rose by 33% year over year to $161.4 billion for the trailing 12 months, indicating that the business is still producing strong revenue.
The main culprit behind the decline in free cash flow is Amazon's capital spending, which increased by 64% year over year to $169 billion for the same period.
This rise in spending reflects the company's investments in artificial intelligence (AI) and other areas, with CEO Andy Jassy noting that AWS is 'booming' and that AI and chips businesses are each exceeding run rates of more than $25 billion.