Amazon's $220 Billion AI Bill Sparks Cash Flow Concerns

Amazon's stock fell by approximately 0.5% to $260.7675 on Tuesday morning, despite a strong second-quarter performance.

The e-commerce and cloud-computing giant posted a 20% surge in revenue to $200.6 billion, with operating income reaching $27.5 billion.

Amazon Web Services sales exploded by 37% to $42.2 billion, while advertising revenue jumped 26% to $19.8 billion.

However, management raised the expected capital spending for 2026 to around $220 billion, which is equivalent to about 110% of Amazon's latest quarterly revenue.

The increased budget has sparked concerns that the company may struggle to generate cash at a faster rate than it consumes it, especially given the negative $7.6 billion trailing free cash flow.