Alibaba and Amazon are spending billions on AI infrastructure, and the bills are coming due

Alibaba and Amazon are both pouring tens of billions into AI infrastructure while watching their free cash flow turn decisively negative. Alibaba’s June-quarter results showed AI Cloud and Compute Services revenue hitting RMB48.44 billion, a 45% year-over-year jump. Amazon’s Q2 2026 report, released July 30, showed AWS revenue climbing 37% to $42.2 billion. The cash burn problem Alibaba’s group-level capital expenditures reached RMB67.68 billion in the quarter, producing a negative free cash flow of RMB44.67 billion. Amazon faces a similar dynamic. Despite AWS generating $16.6 billion in segment operating income, the company’s trailing twelve-month free cash flow sits at negative $7.6 billion, driven largely by AI infrastructure buildouts. Amazon has also raised its full-year 2026 capex guidance to approximately $220 billion, up from an earlier estimate of $200 billion. The culprit for the revision: rising costs of memory chips. Both companies insist the spending is rational. Amazon points to a substantial AWS backlog filled with multi-year customer commitments from heavyweights like Anthropic and OpenAI. Alibaba says it has no idle AI accelerators on its platform, suggesting deman...