Strong Growth, Shrinking Cash Flow

Amazon's third quarter sums up the paradox of the moment. Its AWS cloud unit saw sales climb 39% to $45.98 billion, above the $45.29 billion expected. Operating income reached $17.77 billion (+55%), for a 38.7% margin, the widest since early 2025. The division now accounts for nearly 23% of the group, a record.

That performance comes at a cost. Amazon spent more than $77 billion on assets and equipment in the quarter, well above estimates, producing a free cash outflow of $42.4 billion. The group confirms a $220 billion program for 2026. Overall revenue grew just 12% to $201.9 billion, with signs of fatigue in online retail. The stock fell about 5% after the close.

The Mechanism: Build First, Collect Later

The causal chain is simple. AI demand forces cloud giants to build capacity before revenue arrives. Investment then outpaces cash generation, and the gap must be financed. Microsoft is preparing an offering of at least $25 billion, split into ten tranches of two to forty years, its first bond market issue since 2017. In this context, investors no longer judge revenue growth but the return on capital deployed.

Intel, or Demand Without Supply

The same mechanism plays out upstream. Intel saw data center and AI revenue jump 78% to $7.3 billion, but cannot serve all the demand: affected production lines in Israel and a substrate shortage limit its deliveries. Its PC unit fell 5% to $8.1 billion. Its forecast of $15 billion to $16 billion for the fourth quarter is below the $17.1 billion expected, and the stock plunged about 20% after the close. Demand exists, but industrial capacity is lacking to capture it.

What the Data Does Not Say

Several factors temper this reading. AWS margins are at their peak, Amazon has not raised its investment program, and Microsoft, rated AAA, is financing on good terms. Market moves also blend factors specific to each company, such as memory costs for the PC market. Finally, available scientific publications, with no usable abstracts, and the absence of patent data do not allow measuring the link between research and infrastructure spending.

A Proportionate Conclusion

The observed facts converge: AI demand is confirmed, but meeting it requires capital that the market rewards less and less without visible return. This demonstrates neither a lasting reversal nor a bubble. It indicates that the phase when growth alone was enough is closing.

This article was written with the assistance of artificial intelligence and verified by our editorial team.