NEW YORK, July 23, 2026, 07:06 EDT — Amazon NASDAQ:AMZN saw its stock trade lower as capital expenditures accounted for 99% of its operating cash flow.
Amazon.com, Inc. NASDAQ:AMZN allocated 99% of its trailing operating cash flow towards net capital expenditures. Cash conversion is now the stricter metric for investors.
The ratio is significant as Amazon has allocated roughly $200 billion for capital spending through 2026, much of which is focused on artificial intelligence. On Wednesday, Amazon announced job cuts in its artificial general intelligence division, though it did not specify how many roles were affected.
Amazon shares were seen at $240.16 as of 7:02 a.m. EDT, a decline of 1.9%. Trading on the Nasdaq is scheduled to begin at 9:30 a.m. The stock ended the previous session at $244.85, down 1.1% on Wednesday.
The stock declined 2.0% across the past five sessions but is still up 6.1% for the year.
The cash crunch is evident. Operating cash flow increased by 30%, but free cash flow dropped 95%.
| Trailing 12 months to March | 2025 | 2026 | Change |
|---|---|---|---|
| Operating cash generation | $113.9 billion | $148.5 billion | +30% |
| Capital expenditures for property and equipment | $88.0 billion | $147.3 billion | +67% |
| Free cash flow | $25.9 billion | $1.2 billion | -95% |
| Free cash flow conversion rate | 22.8% | 0.8% | -21.9 points |
Free-cash-flow conversion is determined by dividing free cash flow by operating cash flow. The figures are based on Amazon’s reported numbers; all values are rounded.
Amazon reported that the $59.3 billion yearly rise in spending was largely due to investments in artificial intelligence. The savings from the job cuts announced on Wednesday were not disclosed, making it tough to compare them to the total capital expenditure.
Reuters said Thursday that Jeff Bezos is directing an AI-driven overhaul of Prime Video, known as Lighthouse. The streaming platform has a user base of over 200 million. Amazon did not provide a comment.
The actions point to a stricter AI focus, with research positions reduced and an emphasis shifting to client-oriented distribution. Amazon has not confirmed this approach.
AWS continues to anchor earnings. First-quarter revenue increased by 28% to $37.6 billion. The segment generated $14.2 billion, accounting for 59% of Amazon’s operating income.
Alphabet Inc. NASDAQ:GOOGL delivered challenging results for its peers on Wednesday. Google Cloud reported an 82% surge in revenue, reaching $24.8 billion. Despite this growth, Alphabet shares dropped roughly 3% after the company increased its 2026 capital expenditure outlook.
The quarter resulted in negative free cash flow totaling $5.9 billion. “The demand still outpaces that investment,” finance chief Anat Ashkenazi said. Reuters
David Russell, strategist at TradeStation, stated the issue directly. “Companies exist to make money, not spend money.” Reuters analysis indicates that by 2027, five major cloud companies may outpace their free cash flow with capital expenditure. Reuters
Amazon is set to announce its Q2 earnings on July 30 at 5 p.m. EDT. The company projects revenue between $194 billion and $199 billion, with expected operating income ranging from $20 billion to $24 billion. These figures reflect Amazon’s guidance and are not early results.
The projections reflect an assumption that Prime Day took place within the quarter. Investors are watching to see if cash flow can start to surpass capital expenditures in the coming week.
Risks: AWS may experience decelerating growth. AI capacity might not ramp up as quickly. Retail margins are vulnerable to shipping expenses, currency fluctuations and softening demand.
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