Amazon discloses Q3 2026 results with lower-than-expected profit and negative cash flow due to AI investments
Read more
Olhar Digital
olhardigital.com.br

Amazon discloses Q3 2026 results with lower-than-expected profit and negative cash flow due to AI investments

Amazon presented its financial results for the third quarter of 2026, which fell short of Wall Street projections in terms of both earnings per share and total revenue. Despite the rapid advancement of the cloud computing division, Amazon Web Services (AWS), the company maintained its goal to invest US$ 220 billion (approximately R$ 1.19 trillion) during 2026. However, the accumulated free cash flow over the last twelve months registered a negative balance of US$ 42.4 billion (equivalent to R$ 229 billion).

Following the disclosure of this data on Thursday (29), the company's shares dropped by more than 7% in after-hours trading. Revenue reached US$ 201.9 billion (R$ 1.09 trillion), representing a 12% increase compared to the same period in 2025, although it was slightly below the US$ 202.31 billion (R$ 1.09 trillion) predicted by analysts consulted by LSEG.

Earnings per share were reported at US$ 1.89, falling below the expectation of US$ 1.96. Net income totaled US$ 20.7 billion (R$ 111.8 billion), a figure lower than the US$ 21.2 billion (R$ 114.5 billion) achieved in the previous year. Amazon attributed this reduction mainly to gains of US$ 9.5 billion from investments in Anthropic, which were accounted for in the third quarter of 2025, raising the comparison base.

The company reaffirmed its commitment to capital expenditures, maintaining the forecast of US$ 220 billion (R$ 1.19 trillion) for 2026. These resources are allocated to various initiatives, including expanding the essential infrastructure for artificial intelligence (AI) services.

This high level of investment directly impacted free cash flow. In the twelve months ending in September, Amazon recorded an outflow of US$ 42.4 billion (R$ 229 billion), contrasting with the positive inflow of US$ 14.8 billion (R$ 79.9 billion) observed in the same period last year. According to the company itself, this change was primarily driven by an increase of US$ 94.8 billion (R$ 511.9 billion) in property and equipment acquisitions, after deducting amounts obtained from sales and incentives. Amazon associated this increase in expenses, above all, with the investments made in AI.

In parallel, the accumulated operating cash flow over twelve months showed a growth of 29%, reaching US$ 168.3 billion (R$ 908.8 billion). The disparity between this indicator and free cash flow reflects the significant weight of infrastructure investments.

Looking ahead to the fourth quarter of 2026, Amazon projects revenue ranging between US$ 240 billion and US$ 247 billion (corresponding to about R$ 1.30 trillion to R$ 1.33 trillion), indicating a projected annual growth between 12% and 16%. The average value of this range was slightly below market expectations. The expected operating profit is between US$ 28.5 billion and US$ 33.5 billion (between R$ 153.9 billion and R$ 180.9 billion), compared to the US$ 25 billion (R$ 135 billion) recorded in the fourth quarter of 2025. Furthermore, Amazon forecasts that advertising revenue will return to grow annually by around 18% in the last quarter of the year.

The current results place the company before a dilemma: how to maintain the expansion of AWS and AI services without investments continuing to harm cash generation capacity. Although the cloud division exceeded forecasts, the unsatisfactory performance in profit and advertising, combined with revenue outlooks for the holiday period, contributed to pressure on shares.

Similar stories

Amazon reviews AI usage evaluation metrics, prioritizing impact over token consumption
Read more
tecnoblog.net

Amazon reviews AI usage evaluation metrics, prioritizing impact over token consumption

Amazon is reassessing how it measures the use of artificial intelligence by its software engineers. According to a new internal guideline, the company considers metrics such as the amount of tokens used, tool adoption, and volume of code modifications to be 'deeply flawed' indicators when set as objectives.

Despite this change, the company does not intend to abandon AI. The focus of the alteration lies in the evaluation: instead of rewarding those who use more tools or generate a higher volume of code, Amazon seeks to measure the effect of the work on customers, businesses, and teams.

One of the identified challenges is the phenomenon known as 'tokenmaxxing,' a term used to describe the excessive use of tokens with the aim of inflating internal indicators. Tokens represent the units that models use to process and generate data, and they also affect the operational costs of these tools.

As reported by Fortune, Amazon warns that turning this consumption into a goal can result in increased expenses without guaranteeing a real improvement in results. This problem is not merely theoretical; company employees have even used AI agents in superfluous activities just to boost their numbers in an internal ranking that was discontinued in May.

For Terk Terkowitz, Amazon Vice President, the most appropriate criterion lies in the long-term results achieved, covering the impact on customers, the business, and the teams themselves. Although token consumption and tool adoption indicators are not eliminated, the company clarifies that they can help identify patterns but should not exclusively serve as performance goals.

The guidance also applies to the opposite: Terkowitz considers valuable the discovery of areas where AI is not being effective. The company maintains the incentive for engineers to learn and integrate AI into their daily routines, believing that the technology will remain central to software development, alongside knowledge, technical experience, and the ability to judge whether a specific solution is truly relevant.

This discussion transcends the limits of the company itself. A recent study showed that only 3% of organizations managed to exceed their savings targets through productivity gains provided by AI, even with most planning to expand their investments in this technology.

Popular