Amazon's Free Cash Flow Plunges Amid AI-Fueled Spending Surge

Amazon's free cash flow took a significant hit in the second quarter, swinging from an inflow of $18.2 billion to an outflow of $7.6 billion over the trailing twelve months.

This decline was largely due to increased capital spending, which rose 64% year-over-year to $169 billion, with $54.2 billion spent in the second quarter alone.

However, despite this negative free cash flow, Amazon's operating cash flow still grew 33% year-over-year to $161.4 billion.

The company cited investments in artificial intelligence as the primary driver of increased capital spending, with CEO Andy Jassy noting that AWS is 'booming' and its AI business has already eclipsed a run rate of over $25 billion.

AWS revenue grew 37% year-over-year to $42.2 billion, its fastest growth in 18 quarters, and the segment's operating margin expanded to 39.4% from 32.9% a year ago.