BufeticoIn the twelve months to June 2026, Amazon’s operations brought in $161.4 billion of cash. Over the same twelve months, free cash flow as Amazon defines it was minus $7.6 billion. Both figures come from the same quarterly report, and both are correct.
Free cash flow is the cash left over after a business has paid for everything it needed, including the buildings and equipment it bought. The usual formula is one subtraction. Take operating cash flow, the cash that came in from running the business after the bills were paid, and subtract capital expenditures, what the company spent on assets meant to last for years. On the cash flow statement, those usually appear as “purchases of property and equipment.”
A free cash flow example, line by line
In Amazon’s annual report for 2025, operating cash flow was $139,514 million. Purchases of property and equipment were $131,819 million, the most Amazon had spent on them in any fiscal year up to then. Subtract one from the other and you get about $7.7 billion.
Amazon’s own free cash flow figure for that year was $11,194 million. The $3,499 million gap is what it received from property and equipment sales and incentives, which it takes off its spending before it subtracts. That gives you two free cash flows for 2025 from one annual report.
Free cash flow is what the SEC calls a non-GAAP measure. GAAP, the set of US accounting rules, does not define it, so each company writes its own definition and has to reconcile it to the closest figure in its cash flow statement. For 2024, Amazon published three versions: $38.2 billion, $35.5 billion and $36.2 billion, depending on how it counted finance leases and financing obligations. For 2025 it published one. Before you use any free cash flow figure, check who computed it and what they subtracted.
What most people conclude from minus $7.6 billion
Most readers see that number and assume the business is losing money. A negative number reads like a company spending more than it takes in just to stay open.
The rest of the report says otherwise. Operating cash flow for those twelve months was 33% higher than a year earlier: $161.4 billion, against $121.1 billion. Spending grew faster. Purchases of property and equipment, net of what Amazon got back from sales and incentives, went up by $66.1 billion, enough to push free cash flow below zero. Amazon’s filings say the spending went mainly into technology infrastructure, most of it to support growth at AWS (its cloud business), and into more capacity for its fulfillment network, the warehouses and delivery network behind its online store. I walked through the rest of that quarter in the Amazon case study.
In the first half of 2026, Amazon also put $28.7 billion into OpenAI’s preferred stock, and none of it touches free cash flow. Stakes in other companies and acquisitions sit on a different line of the cash flow statement, while the money a company spends building its own capacity comes straight out of free cash flow.
The line that cannot tell building from bleeding
When I first computed free cash flow across thousands of listed companies, I subtracted every dollar of capital spending, the way the formula says. A company pouring cash into new capacity and a company slowly bleeding produced the same weak number. Measured on 2025, the year of that record spending, my screen put Amazon’s price far above anything the business could support. I wrote up how I found that mistake.
The repair meant separating two kinds of spending: what a company spends to keep the business the size it is, and what it spends to make it bigger.
US accounting rules do not ask any company to put a number on that split, and Amazon does not. Its cash flow statement has one line, purchases of property and equipment, where a server that replaces a worn one sits next to a server for a data center that did not exist last year. So any split, including the one I use, is an estimate.
Where this breaks
A company that lets its trucks and plants age, spending less than it should, drags my estimate of its maintenance spending down with it. Free cash flow improves while the business wears out, and no line in the statement flags it.
A dollar I call “growth” may never earn anything, and on the day it is paid for, capacity nobody ends up using looks exactly like capacity that fills up. The risks section of Amazon’s annual report warns that misjudging demand can leave it with excess data center capacity and impairment charges, which are write-downs of assets now worth less than the value they carry on the books. It can take years before the filings tell the two apart.
That is why, in my screen, the estimate touches what a business is worth and nothing else. The six layers, and every test on the shape of a company’s cash, still run on the plain, unadjusted number.
The filing does the subtraction to the last million dollars and never draws the one line you would need to read it.