Andy Jassy's Amazon is down 7% premarket as it signals AI spending will climb again next year

Amazon's cloud business had its best growth in years. The stock is still falling. Shares of the company led by CEO Andy Jassy were down between about 6.5% and 7.2% in premarket trading on Friday, according to Benzinga, CNBC and Reuters, adding to a slide that began in extended trading on Thursday.

The reason, as with Alphabet a day earlier, is the gap between what the company is spending on artificial intelligence and the cash its business is producing right now.

A narrow miss

Amazon earned $1.89 a share on revenue of $201.94 billion in the third quarter, according to CNBC and Benzinga. Analysts polled by LSEG had expected $1.96 and $202.31 billion. Investing.com reported that the company flagged slowing growth in its e-commerce and advertising businesses.

On their own, misses of that size might not move a stock much. The cash numbers did. CNBC reported that Amazon posted negative free cash flow for the second quarter in a row, with the outflow much larger than in the previous period. TipRanks put trailing 12-month free cash flow at negative $42.4 billion.

Spending goes up again

Amazon kept its forecast for 2026 capital expenditures at about $220 billion, CNBC said. What surprised some investors was the signal about next year: Reuters reported that Amazon pointed to another increase in capital spending in 2027, on top of this year's already elevated level.

That matters because the same question is now being asked of every large AI spender. Reuters described Thursday's trading as investors separating companies that can fund their AI ambitions from cash flow from those that burn cash and borrow to do it. Alphabet, which reported negative free cash flow of $9.07 billion, fell 12.6% on Thursday, its worst day on record according to Kiplinger and Reuters.

The part that worked

Amazon Web Services, the cloud unit that rents computing power to other companies, grew 39% to $45.98 billion in the quarter, according to CNBC, ahead of the $45.29 billion StreetAccount estimate. Investing.com described the roughly $46 billion in revenue as the fastest pace of growth in years, and Amazon's release called it the fastest in nearly five years.

"Our AWS investment in functionality and infrastructure is working," Jassy said in the earnings release, as quoted by Benzinga, adding that the company projects AWS revenue growth of more than 40% in both 2027 and 2028.

Those projections are the core of the bull and bear debate this morning. The growth rate shows demand for AI computing is real. The cash outflow shows how much it costs to meet that demand before the revenue arrives.

A rough week for Big Tech

Amazon is the third major tech company this week to report AI-heavy spending, and the market's reaction has varied with the cash story. Microsoft, which kept its free cash flow positive, held up far better after its Wednesday report. Alphabet, whose spending outran its cash, had its worst day ever. Amazon and Intel are now both lower before the bell, and CNBC said Nasdaq futures were down about 2%.

Intel added to the pressure on Friday morning, trading about 25% lower premarket after it warned it would not generate positive free cash flow this year and would raise capital spending sharply in 2027, according to Reuters.

Apple, the last of the megacaps on the calendar, is scheduled to report its fiscal fourth-quarter results on Monday, Nov. 2.

What to watch

• Whether Amazon's premarket decline holds into the 9:30 a.m. ET open, or narrows as investors digest the AWS numbers.
• Commentary from analysts on Amazon's 2027 spending signal, after Reuters reported the company expects another increase.
• Any read-through to other cloud and AI infrastructure names as the regular session opens.

The pattern of the week is consistent. Investors are rewarding AI growth when it comes with cash, and selling it when the spending runs ahead. Amazon's stock reaction this morning shows which side of that line the market has placed it on, at least for now.