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# Alphabet and Amazon report negative free cash flow as AI spending climbs
- URL: https://theainewsfiles.com/alphabet-amazon-negative-free-cash-flow-ai-spending/
- Published: 2026-10-31T13:31:22.000Z
- Updated: 2026-10-31T13:31:22.000Z
- Description: Alphabet's third quarter and Amazon's trailing twelve months both ended with negative free cash flow, as AI capex rose. A look at what the earnings show, and at Anthropic's IPO filing.
- Author: J E Cowie
- Tags: News

Two of the biggest spenders on AI infrastructure have now reported numbers in which cash going out exceeded cash coming in. Alphabet's third quarter ended with negative free cash flow. Amazon's trailing twelve months did too. Both companies kept their cloud businesses growing quickly. The market's reaction, as reported this week, was sharp.

## Alphabet: cloud beats, everything else misses

Alphabet reported negative free cash flow of $9.07 billion for the third quarter, according to CNBC's report of the results on 28 October. Capital expenditure for the quarter was $51.36 billion, below the $55.09 billion analysts had expected. Revenue was $127.58 billion against $128.22 billion expected, and adjusted earnings per share were $2.67 against $3.02 expected. CNBC noted that revenue grew 25% from a year earlier but that the company posted its first top-and-bottom-line miss in nearly four years. CNBC reported that Alphabet shares slumped more than 10%.

The full-year capex forecast was maintained after being lifted in the second quarter to between $195 billion and $205 billion. CNBC reported that annual capex is expected to top $200 billion before exceeding $300 billion in 2027\. Finance chief Anat Ashkenazi told analysts: "We continue to expect our capex to increase significantly in 2027, and will provide further details on our Q4 call."

Cloud was the bright spot. CNBC reported that cloud revenue more than doubled to $30.7 billion, ahead of the $28.7 billion analysts expected. Google Cloud CEO Thomas Kurian said: "We are seeing extraordinary demand and strong growth from both AI labs, capital markets, financial service institutions, and enterprises." Search revenue grew 12% to $63.35 billion, short of a $64.96 billion estimate. CEO Sundar Pichai said the company's AI investments powered the highest query growth rate over the last five years, according to CNBC.

CNBC also reported that Alphabet's long-term debt climbed to $125.1 billion, up from $21.6 billion a year earlier.

TechCrunch's Rebecca Bellan reported on 30 October that Alphabet's shares fell again on Friday, and described the quarter as a second consecutive one of negative free cash flow. TechCrunch's reading is that the success of AI Mode, Google's AI feature built into Search, is eating into the search business. That is TechCrunch's analysis.

## Amazon: cash flow turns negative on a trailing basis

![Amazon's headquarters office buildings, exterior](https://theainewsfiles.com/content/images/2026/10/shot2_amazon-s-headquarters-office-buildings-e.jpg)

The Amazon Spheres.

Amazon's own release gives the figures. Free cash flow for the trailing twelve months decreased to an outflow of $42.4 billion, against an inflow of $14.8 billion for the twelve months ended 30 September 2025\. Amazon attributes this mainly to a year-over-year increase of $94.8 billion in purchases of property and equipment, net of proceeds from sales and incentives, which it says primarily reflects investments in artificial intelligence. Operating cash flow rose 29% to $168.3 billion over the same period.

Amazon says it continues to expect [2026 cash capital expenditures](https://theainewsfiles.com/jassy-aws-trillion-dollar-revenue-capex/) of approximately $220 billion. In February, Tom's Hardware reported that Amazon had announced plans to spend $200 billion in 2026 and that its shares fell 9% on the news.

AWS segment sales increased 39% year-over-year to $46.0 billion, with segment operating income of $17.8 billion. CEO Andy Jassy said: "Our AWS investment in functionality and infrastructure is working, with over 39% year-over-year revenue growth in Q3 ($184 billion revenue run rate) and projected revenue growth rates of over 40% both in 2027 and in 2028." TechCrunch reported that Amazon's stock fell about 7% after the earnings report.

## Meta, Microsoft and Friday's sell-off

The remaining figures here come from TechCrunch's 30 October report. TechCrunch reported negative free cash flow of $2.1 billion for Meta in the third quarter, with capex outpacing operating cash, and guidance of as much as $145 billion in capex this year. It reported that CEO Mark Zuckerberg has said Meta's new free personal AI agent, Muse, takes a great deal of computing power to run.

Microsoft was, in TechCrunch's words, the only exception on free cash flow: $18.6 billion positive in its latest quarter, with capex of $45.2 billion against the $50 billion it had projected. TechCrunch reported that Microsoft said this was not an intentional pullback from AI spending and blamed delays in capacity from third-party providers.

On Friday, TechCrunch reported, the Nasdaq fell 2.9%, with Nvidia down 4%, Broadcom more than 5% and Qualcomm 11%.

## Anthropic's IPO arrives into that mood

CNBC reported on [Anthropic's public IPO filing](https://theainewsfiles.com/anthropic-ipo-filing-s1-loss-revenue-ant/) on Monday, 26 October, saying it puts the company in position to pursue what could be the largest initial stock offering in history. That filing follows the draft registration statement Anthropic said on 1 June 2026 that it had confidentially submitted to the US Securities and Exchange Commission.

CNBC reported that Anthropic's second-quarter revenue was $11.56 billion, up from $787 million a year earlier, and that it reported $974 million in operating income for the quarter. It also reported that the company is betting investors will look past over $80 billion in losses in the first half of the year. CNBC quoted Jai Das, co-founder of Sapphire Ventures: "If it underperforms expectations, it'll be a little bit of a house of cards."

TechCrunch says the wider unease could complicate the listing, and that Anthropic's future growth depends on securing enormous amounts of compute. It also reports, citing the Financial Times on Friday, that Blackstone has warned investors Anthropic might not qualify for an investment-grade rating after its IPO. TechCrunch says that could leave Anthropic more reliant on hyperscalers and third parties to fund its infrastructure plans.

## What the numbers add up to

Demand for the cloud services is not the problem in these results: Google Cloud and AWS both reported fast growth. The strain is in how the companies pay for it. Amazon's operating cash flow rose 29% and its free cash flow was still negative. Alphabet's capex came in under analysts' expectations and its free cash flow was still negative. My reading is that the question investors are now pricing is how long spending can run ahead of cash generation, not whether customers want the product.

# Sources

Amazon (2026) 'Amazon.com announces third quarter results', Amazon News, 29 October 2026, available at: [https://www.aboutamazon.com/news/company-news/amazon-earnings-q3-2026-report](https://www.aboutamazon.com/news/company-news/amazon-earnings-q3-2026-report?ref=theainewsfiles.com) (Accessed: 30 October 2026).

Anthropic (2026) 'Anthropic confidentially submits draft S-1 to the SEC', Anthropic, 1 June 2026, available at: [https://www.anthropic.com/news/confidential-draft-s1-sec](https://www.anthropic.com/news/confidential-draft-s1-sec?ref=theainewsfiles.com) (Accessed: 30 October 2026).

CNBC (2026) 'Alphabet sinks 10% as it holds 2026 capex unchanged, expects significant increase in 2027', CNBC, 28 October 2026, available at: [https://www.cnbc.com/2026/10/28/alphabet-googl-earnings-q3-2026.html](https://www.cnbc.com/2026/10/28/alphabet-googl-earnings-q3-2026.html?ref=theainewsfiles.com) (Accessed: 30 October 2026).

CNBC (2026) 'From Wall Street to Silicon Valley, Anthropic IPO poised to have massive "trickle-down effect"', CNBC, 26 October 2026, available at: [https://www.cnbc.com/2026/10/26/anthropic-ipo-might-trigger-tech-reset-if-ipo-underperforms.html](https://www.cnbc.com/2026/10/26/anthropic-ipo-might-trigger-tech-reset-if-ipo-underperforms.html?ref=theainewsfiles.com) (Accessed: 30 October 2026).

Bellan, R. (2026) 'Cracks are emerging in the AI spending boom', TechCrunch, 30 October 2026, available at: [https://techcrunch.com/2026/10/30/cracks-are-emerging-in-the-ai-spending-boom/](https://techcrunch.com/2026/10/30/cracks-are-emerging-in-the-ai-spending-boom/?ref=theainewsfiles.com) (Accessed: 30 October 2026).

Ferreira, B. (2026) 'Big Tech stocks take a $1 trillion tumble as projected AI spending continues to outweigh revenue — investors are antsy about long-term planning becoming never-ending spending', Tom's Hardware, 6 February 2026, available at: [https://www.tomshardware.com/tech-industry/big-tech/big-tech-stocks-take-a-usd1-trillion-tumble-as-projected-ai-spending-continues-to-outweigh-revenue-investors-antsy-about-long-term-planning-becoming-never-ending-spending](https://www.tomshardware.com/tech-industry/big-tech/big-tech-stocks-take-a-usd1-trillion-tumble-as-projected-ai-spending-continues-to-outweigh-revenue-investors-antsy-about-long-term-planning-becoming-never-ending-spending?ref=theainewsfiles.com) (Accessed: 30 October 2026).

## Picture credits

- Top picture: Google's headquarters campus. Google Building 1900 (Googleplex), photo by Runner1928, [CC BY-SA 3.0](https://creativecommons.org/licenses/by-sa/3.0/?ref=theainewsfiles.com), via [Wikimedia Commons](https://commons.wikimedia.org/wiki/File:Google%5FBuilding%5F1900%5FExterior%5FFront.jpg?ref=theainewsfiles.com)
- The Amazon Spheres. Photo: Andy Li ([source](https://commons.wikimedia.org/wiki/File:Amazon%5FSpheres%5F2018.jpg?ref=theainewsfiles.com))