JHVEPhoto/iStock Editorial via Getty Images Introduction Per my November article , Amazon ( AMZN ) looked like a buy for long-term investors at the time, but it was before management said they expect to spend about $200 billion on capex in 2026. Putting this in perspective, Amazon had free cash flow ("FCF") of $11.2 billion in 2025 from $139.5 billion in operating cash flow ("OCF") less $128.3 bil...
JHVEPhoto/iStock Editorial via Getty Images Introduction Per my November article , Amazon ( AMZN ) looked like a buy for long-term investors at the time, but it was before management said they expect to spend about $200 billion on capex in 2026. Putting this in perspective, Amazon had free cash flow ("FCF") of $11.2 billion in 2025 from $139.5 billion in operating cash flow ("OCF") less $128.3 billion in net capex ($131.8 billion in property and equipment ("P&E") purchases less $3.5 billion in P&E proceeds). OCF is expected to be under $200 billion next year, which means Amazon should have negative FCF for 2026 given the massive increase in capex . My thesis is that Amazon is rather old to be going into negative FCF territory without management providing clear and thorough explanations. The Numbers Going through 10-K filings and subtracting net capex from OCF, we look at Amazon's FCF over the years. Apart from accounting quirks in 1998, Amazon was FCF negative from 1995 to 2001. They started being FCF positive in 2002 and this lasted for 19 years until the COVID pandemic hit, and we saw negative FCF in both 2021 and 2022. The difference between expected negative FCF in 2026 and negative FCF in 2021 and 2022 is that management did a good job communicating the investment choices made in the pandemic years of 2020, 2021 and 2022. Here is what their FCF has looked like the last 8 years (in billions of dollars): FCF OCF Net Capex SBC Depreciation/ Amortization Operating Income Revenue 2018 $19.4 $30.7 $(11.3) $(5.4) $(15.3) $12.4 $232.9 2019 $25.8 $38.5 $(12.7) $(6.9) $(21.8) $14.5 $280.5 2020 $31.0 $66.1 $(35.0) $(9.2) $(25.3) $22.9 $386.1 2021 $(9.1) $46.3 $(55.4) $(12.8) $(34.4) $24.9 $469.8 2022 $(11.6) $46.8 $(58.3) $(19.6) $(41.9) $12.2 $514.0 2023 $36.8 $84.9 $(48.1) $(24.0) $(48.7) $36.9 $574.8 2024 $38.2 $115.9 $(77.7) $(22.0) $(52.8) $68.6 $638.0 2025 $11.2 $139.5 $(128.3) $(19.5) $(65.8) $80.0 $716.9 Click to enlarge This is a cumulative 8-year FCF of nearly $...