AMZN’s AWS revenue grew 39.3% year over year in the third quarter, but free cash flow outflows totaled about $42.4 billion over the past 12 months.
My view: Cloud business growth is now supported by earnings data, but the market will next focus on when investment in expansion turns into cash. AWS reported operating income of about $17.773 billion for the quarter, and remains the group’s main source of profit. Meanwhile, the group’s operating cash flow grew, but net spending on equipment exceeded operating cash flow.
The company expects full-year cash capital expenditures of about $220 billion. That is a forecast, not spending that has already occurred. The cash flow figures above are also on a rolling 12-month basis, not a quarterly loss. The earnings report did not separately disclose how much AWS revenue came from AI, so cloud growth cannot all be attributed to AI returns.
Going forward, we need to check whether free cash flow improves once the capital expenditures are made. If AWS continues to accelerate while cash keeps flowing out, should the market reward growth first, or demand cash returns first?
My view: Cloud business growth is now supported by earnings data, but the market will next focus on when investment in expansion turns into cash. AWS reported operating income of about $17.773 billion for the quarter, and remains the group’s main source of profit. Meanwhile, the group’s operating cash flow grew, but net spending on equipment exceeded operating cash flow.
The company expects full-year cash capital expenditures of about $220 billion. That is a forecast, not spending that has already occurred. The cash flow figures above are also on a rolling 12-month basis, not a quarterly loss. The earnings report did not separately disclose how much AWS revenue came from AI, so cloud growth cannot all be attributed to AI returns.
Going forward, we need to check whether free cash flow improves once the capital expenditures are made. If AWS continues to accelerate while cash keeps flowing out, should the market reward growth first, or demand cash returns first?