Amazon's Free Cash Flow Swung $26 Billion in the Wrong Direction. The Stock Rose 15% Anyway.

Amazon's stock jumped 15% despite reporting negative free cash flow of $7.6 billion for the trailing 12 months, a $26 billion reversal from the prior year's $18.2 billion positive cash flow. The divergence between price action and cash flow reflects investor confidence in the company's AI infrastructure buildout.

Operating cash flow climbed 33% to $161.4 billion, while capital expenditures surged 64% to $169 billion, primarily funding AI-related infrastructure. The cash flow deficit stems entirely from this aggressive spending cycle, not operational weakness.

AWS drove the bullish reaction with 37% revenue growth to $42.2 billion, marking its fastest expansion in 18 quarters. Operating income for the cloud segment jumped 64%, and margins widened to 39.4%. The combination of accelerating revenue growth and margin expansion signals pricing power and efficiency gains in the company's highest-margin business.

Amazon projects $220 billion in capital spending for 2026, signaling continued heavy investment in AI infrastructure. The market is pricing in long-term returns from this buildout rather than near-term cash generation.