Amazon's stock drops amid heavy AI investments

Amazon's stock fell sharply in after-hours trading on Thursday following the company's report of a significant drop in free cash flow, attributed to its substantial investments in AI. The company reported a negative free cash flow of $42.4 billion for the 12 months ended Sept. 30, 2026, compared to a positive $14.8 billion in the same period the previous year. Amazon CEO Andy Jassy noted that AWS' backlog has increased to $578 billion, up from $496 billion at the end of the second quarter. The company's revenue reached $201.9 billion, a 12% increase from the previous year, slightly below S&P Capital IQ's estimate of $202.2 billion. Amazon's advertising revenue grew by 12% year-over-year, lagging behind the previous quarter's 26% growth. Investors are closely watching as Amazon faces pressure to demonstrate that its AI investments are yielding returns. The company recently blocked Meta's Muse agent from its platform, amid concerns that AI tools could impact its ad business.