Key Takeaways
- Amazon raised its 2026 cash capex outlook from about $200 billion to about $220 billion in July, and CEO Andy Jassy tied the increase to higher memory costs.
- Capex grew from $52.73 billion in 2023 to $131.82 billion in 2025, while cash from operations grew from $84.95 billion to $139.51 billion.
- AWS revenue grew 36.7% in Q2 with a $496 billion backlog, but Jassy said Amazon will “encounter free cash flow headwinds” until new data centers come online.
Amazon raised its capex guide by $20 billion on memory costs while free cash flow narrowed. See Amazon’s capex and cash flow on TIKR for free →
Amazon’s $20 Billion Capex Raise Came From Memory Prices
On the Q2 2026 earnings call, Andy Jassy dropped the number almost in passing. Amazon (AMZN) now expects to spend about $220 billion in cash capex in 2026, “with the higher cost of memory pushing this number up from our prior estimate of about $200 billion.” Even then, he said, Amazon “will still not have enough capacity to meet all the demand we have in 2026.”
So higher memory costs, rather than a newly announced capacity expansion, are the reason Jassy gave for the extra $20 billion. AWS revenue rose 36.7% to $42.2 billion, and the backlog stands at $496 billion.
Jassy was upfront about timing. Data center capital goes out about two years before servers earn anything, so Amazon will “spend a lot of CapEx and encounter free cash flow headwinds” until those sites are monetized.
TIKR’s data shows the squeeze has already started. Capex rose about 2.5x from $52.73 billion in 2023 to $131.82 billion in 2025, while cash from operations rose about 64% over the same stretch. Capex took roughly 94% of operating cash flow in 2025, up from 62% in 2023. Calculated free cash flow dropped from $32.88 billion in 2024 to $7.69 billion in 2025.
Whether Operating Cash Flow Can Carry a $220 Billion Year
The 2026 guide sits about 67% above 2025’s capex, though capex definitions may differ slightly. Covering $220 billion from operations alone would take about 58% growth in operating cash flow. Last year’s growth was about 20%.
Jassy’s payback math is credible. Servers break even in a little under three years, carry useful lives of at least five to six years, and most AI capacity is contracted for at least five-year terms. CFO Brian Olsavsky also pointed to “a lot of options” for funding the growth, and Amazon has already issued debt this year.
The demand and contracts are real, but 2025 already left little free cash flow, and a guide that rose on component prices rather than capacity leaves less room for another surprise. At last year’s growth pace, operating cash flow would reach about $168 billion, leaving roughly $52 billion of capex to be funded elsewhere. (A calculation, not guidance.)
The Q3 report is the next test. Cash capex near Q2’s $53.1 billion with faster operating cash flow growth would ease the concern; another memory-driven increase would sharpen it. Q2 is a reference point, not a target.
Covering $220 billion of capex would take about 58% growth in operating cash flow, against roughly 20% last year. Monitor Amazon’s quarterly cash flow on TIKR for free →
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
