Amazon to report Q3 earnings after the bell with AI spend under scrutiny

Amazon is slated to report third-quarter earnings results after the bell on Thursday.

Investors expect to see robust growth in Amazon's cloud segment. AWS sales are predicted to grow 38%, according to StreetAccount, compared with a 37% gain last quarter. It would mark AWS's fifth consecutive quarter of revenue acceleration.

That momentum isn't expected to slow down. CEO Andy Jassy said Amazon's cloud capacity is "largely sold out" for next year, and it's received significant commitments for 2028 as well.

"We always leave a certain amount for on demand and our inference service Bedrock or EC2, but largely sold out all the big chunks," Jassy said on an Andreessen Horowitz podcast last week. "A good chunk of '28 is sold out."

Wall Street will be listening for any commentary from Amazon executives around AI spending.

Last quarter, the company hiked its capital expenditure forecast for 2026 to $220 billion, up from $200 billion. Analysts surveyed by StreetAccount expect Amazon's capex to creep up more than $280 billion in 2027.

Amazon has rushed to bring more data centers online to meet surging demand for AI computing power. The aggressive spending has eaten into the company's cash flow . In July, the company reported negative free cash flow of $7.6 billion for the trailing twelve months, compared with positive free cash flow of $18.2 billion one year earlier. It's expected to be cash flow negative in the current quarter, with an outflow of $9.9 billion, according to FactSet estimates.

Alphabet and Meta both reported negative free cash flow in their latest quarterly earnings reports. Microsoft said Wednesday its free cash flow declined 27% in the fiscal first quarter, but its cash flow remained positive, unlike its hyperscaler peers.

As Amazon shells out more on AI, it's steadily trimmed its headcount. The company has laid off more than 57,000 staffers since 2022, or roughly 16% of its corporate workforce. The job cuts have continued on a rolling basis this year via smaller rounds of layoffs.

The company on Wednesday laid off some staffers in its device software and services team to "operate more efficiently and better align with our product roadsmap," an Amazon spokesperson confirmed to CNBC. Fewer than 250 employees were let go as a result of the job cuts, the company said.