JPMorgan estimates Amazon will increase capital expenditures by about 77% to $395 billion in 2027 from roughly $220 billion planned for 2026, following management’s guidance that next year’s spending will be “meaningfully more.” Meanwhile, Amazon shares have rallied 11% from their 7.5% post-earnings drop on Thursday evening, leaving the stock up 3% from its close just before the third quarter report.
On the earnings call, CEO Andy Jassy said Amazon is installing an AI accelerator chip, either a GPU or custom Trainium processor, roughly every 14 seconds as customers consume capacity almost as fast as it comes online. Within Amazon Web Services, Bedrock token volume grew nearly 17-fold year over year, Fortune 500 spending on Bedrock rose almost sevenfold, and inference accounted for well over half of AWS AI revenue.
The stock rebound followed an initial selloff after third quarter revenue of $201.9 billion and earnings of $1.89 per share missed consensus estimates of $202.3 billion and $1.96, while quarterly capital spending hit $77.3 billion and pushed trailing 12 month free cash flow to negative $42.4 billion. Even so, operating income jumped 61% to $28.1 billion as AWS sales rose 39% to $46 billion, and Jassy projected the cloud division will grow more than 40% in both 2027 and 2028.