Amazon's $220 Billion Bet on AWS and AI Sets Up Cash Flow Headwinds

Amazon's planned capital expenditure for 2026 is a staggering $220 billion, which is roughly equivalent to its revenue of $775.7 billion over the trailing twelve months.

This significant investment will be allocated towards Amazon Web Services (AWS) and generative AI, with a substantial portion going towards data centers, servers, and networking equipment.

The company has already raised this bill once, increasing it by about $20 billion due to higher memory prices across the industry.

Amazon's management has stated that demand for these components has already reserved the lion's share of 2027 capacity and a significant portion of 2028 capacity as well, meaning they will have to continue purchasing at inflated prices for years to come.