Amazon AMZN posted its fastest AWS (Amazon Web Services) growth in 18 quarters in the second quarter of 2026. Revenues jumped 37% year over year to $42.2 billion, with segment operating income surging 64% and margin expanding to 39.4% from 32.9%. That's strong evidence that the company's massive AI infrastructure spending is generating real demand. Yet over the same trailing 12 months (TTM), free cash flow (FCF) swung negative. The gap comes down to timing. Revenues are benefiting from capacity already in use, while FCF is absorbing the cost of capacity Amazon is still building. The question is whether that new capacity can generate enough revenues and cash flow to justify the investment.
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