Amazon's free cash flow turned negative by $7.6 billion over the past 12 months even as operating cash flow climbed 33%, as spending tied to artificial intelligence outpaced the cash the business brought in. The gap is being covered largely by new long-term debt, which nearly doubled over the same period.
Amazon generated around $161.4 billion in cash over the past 12 months, up 33% year over year, but spent $169 billion, leaving the company about $7.6 billion short. That gap sits behind an otherwise strong second-quarter earnings report.
Earnings look strong, but cash tells a different story
Amazon posted earnings of $5.75 per diluted share in the second quarter of 2026, up from $1.68 in the same quarter of 2025. However, that figure includes $69 billion in "other" income tied to the company's investment in Anthropic, which is larger than the company's $51.3 billion in operating income and is not likely to repeat. If Anthropic's value declines, that benefit could reverse.
Because earnings can be shaped by items like this, the cash flow statement shows a clearer picture of where money actually comes from and goes.
AI spending is driving the gap
Artificial intelligence has changed Amazon's cash flow picture. The company generated $161.4 billion in cash over the past 12 months but spent $169 billion, with AI investment driving a significant share of that capital spending. As a result, Amazon spent about $7.6 billion more in cash than its business generated.
Spending on artificial intelligence appears to be heating up rather than cooling down, so the gap could persist if Amazon keeps investing at this pace.
Debt is filling the shortfall
Amazon has turned to debt markets to cover the difference. The company raised nearly $77 billion over the past year from the sale of long-term debt. Its long-term debt rose from $65.6 billion at the end of 2025 to nearly $128.9 billion at the end of the second quarter of 2026.
The AI buildout that produced this quarter's earnings boost is the same force now pulling on Amazon's cash and balance sheet.
Source: The Motley Fool
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