Alibaba and Amazon are significantly increasing investments in AI infrastructure, leading to negative free cash flow for both corporations. Alibaba reported a 45% year-over-year growth in AI Cloud and Compute Services revenue, reaching RMB 48.44 billion for the June quarter.
Alibaba's capital expenditures for the quarter totaled RMB 67.68 billion, resulting in a negative free cash flow of RMB 44.67 billion. The company reports that all AI accelerators on its platform are currently in use, indicating high demand for its computing resources.
Amazon's AWS revenue grew by 37% to $42.2 billion in Q2 2026. Despite generating $16.6 billion in operating income, the company's trailing twelve-month free cash flow is negative $7.6 billion, primarily due to infrastructure expansion.
Amazon has increased its full-year 2026 capital expenditure guidance to approximately $220 billion, up from the previous estimate of $200 billion. The company attributes this revision to the rising costs of memory chips required for AI development.
Both companies justify the high spending through long-term customer commitments. Amazon highlights contracts with major clients such as Anthropic and OpenAI, while Alibaba emphasizes that its current supply of AI compute is fully utilized by market demand.
