Amazon Spent More on Data Centers Last Quarter Than AWS Earned in Revenue. Should Investors Worry?
2026-10-24 11:15
•Adria Cimino •The Motley Fool
••••• • Axe Cap view
Amazon’s Cloud Betting: Too Big to Ignore but Too Soon to Celebrate
Amazon's record capex in data centers outstrips AWS revenue, posing near-term cash flow pressure but signaling confidence in cloud growth.
Amazon’s latest spend on data centers, exceeding current AWS revenue, should make investors pause—but not panic. With $53 billion spent against $42 billion earned in the quarter, free cash flow will tighten before new facilities start paying off. Still, this is not reckless spending; it’s backed by a massive $496 billion backlog and strong 36% revenue growth in AWS, Amazon’s cloud arm. The company is playing the long game, much like it did when building AWS from scratch. For South African investors eyeing this, the USD/ZAR is key. Should Amazon’s cloud bets pay off, the global tech sector—and by extension, rand liquidity—benefits. But if cloud demand cools or inflation-driven costs rise, the capex binge may weigh on Amazon’s shares and the rand. Watch carefully, but don’t rush in just yet. this is just our opinion and not financial advice
Wait for more visibility on Amazon’s cash flow before buying. Rand watchers should monitor USD/ZAR closely, as global tech fortunes remain a top driver. Consider trimming tech-heavy positions if Amazon’s capex impacts sentiment.
- USD/ZAR
- Naspers
- Cloud demand slows due to economic downturn
- Rising inflation increases Amazon’s cost base
6/10
Amazon spent $53 billion on capital expenditures in Q2 2026, exceeding AWS's $42 billion quarterly revenue, primarily for AI and cloud infrastructure. Management justifies the aggressive spending citing a $496 billion backlog and strong future demand, though free cash flow will face pressure until new data centers become operational. The company raised its 2026 capex forecast by $20 billion to $220 billion, betting on timing and future revenue growth.
Our take is based on reporting first published by The Motley Fool.