Amazon and Alphabet: Negative Cash Flow, Long-Term Commitments

05.08.2026

6 min read

Two of the three major cloud providers recently reported negative free cash flow. Amazon reported a free cash flow of around minus €6.6 billion over twelve months. Alphabet reported around minus €5.1 billion in the quarter. Long-term commitments mean taking on part of this profile.

Key Takeaways

Negative free cash flow. Amazon reported negative free cash flow over twelve months, Alphabet in Q2 2026. Microsoft remained positive at around €17.1 billion.
Order backlog multiples. AWS order backlog reached around €432 billion. That’s two to three times annualized AWS revenue of around €147.3 billion.
Leases without consideration. Microsoft reported undelivered data-center lease contracts worth around €286.8 billion. The obligation appears in filings without prior consideration.

What the numbers say about the financing side

Amazon published free cash flow for the last twelve months of around minus €6.6 billion on 30 July 2026. This figure is the core of this analysis. Alphabet reported free cash flow of around minus €5.1 billion in the quarter on 22 July 2026.

Definition

What is free cash flow? Free cash flow is the net cash inflow from operating activities minus capital expenditures over a period. It shows how much cash a provider actually retains after its investments. A negative value means the company is investing faster than its core business is generating cash.

Microsoft delivered the opposite case with positive free cash flow on 29 July 2026. The quarterly figure was around €17.1 billion. Investment velocity separates the three providers. Amazon increased group investments in the quarter by 68 percent to around €47.2 billion.

Alphabet invested around €39.1 billion in the quarter. In June 2026, Alphabet also raised around €43.2 billion net through an equity measure. Microsoft invested around €35.7 billion from April to June. That was an increase of more than 70 percent.

2026 plans are uniformly high. Amazon raised its investment plan by 10 percent to around €191.7 billion. Alphabet plans around €170 to €179 billion. After changing lease accounting, Microsoft expects around €152.5 billion for the calendar year, down from a previous estimate of around €165.6 billion.

The providers remain profitable. AWS grew 37 percent to around €36.8 billion. Azure grew 43 percent. Google Cloud grew 82 percent to around €21.6 billion. Google Cloud’s operating result rose to around €7.7 billion from around €2.5 billion the previous year. The negative free cash flow stems from investment velocity.

Why the Order Backlog Is Its Own Metric

AWS’s order backlog stood at around €432 billion. Its annualized AWS revenue was about €147.3 billion. The backlog therefore equals roughly two to three times annual sales. This ratio matters for multi-year contract decisions.

Microsoft reported a cloud order backlog of around €591 billion. Backlogs of this magnitude lock in demand and delivery obligations for years. They turn capacity questions into financing and concentration risks. The commitment binds both sides of the contract.

On 30 July 2026, Amazon President and CEO Andy Jassy told Reuters that scarcity would persist. He said, “Even at that amount, we will still not have enough capacity to meet all of the demand we have in 2026 … I believe this dynamic will also be true in 2027 too.” Alphabet CFO Anat Ashkenazi echoed the supply-side bottleneck in a CNBC interview on 22 July 2026, citing very strong demand from external cloud customers and within the company itself.

These disclosures do not confirm region-specific capacity for Germany, Austria or Switzerland. Nor do they announce list-price increases or revised terms. Both points remain open and should be treated as assumptions in any multi-year decision.

€432 billion

AWS’s order backlog equals two to three times its annualized revenue of about €147 billion and highlights the binding side of capacity scarcity.

Reuters, 30.07.2026

Unexecuted Lease Obligations: The Overlooked Detail

Microsoft’s filings on 29 July 2026 showed data-center lease agreements worth about €286.8 billion that had not yet started. These are commitments without any prior performance. The figure expands the picture beyond current free cash flow.

Lease obligations of this scale constrain future flexibility. Once the contracts begin, they raise the provider’s fixed-cost base. For a multi-year counterparty, the total includes both planned investments and already-accepted obligations. The Microsoft case shows that positive free cash flow does not cancel out such burdens.

Amazon and Alphabet did not publish a comparable lease block in the same format. The comparison between providers therefore remains incomplete. This exact gap belongs in the supplier file. An investment committee must judge what is documented and what is missing.

Implications for Multi-Year Commitments

A multi-year commitment transfers part of the provider’s financing profile into your own planning. The customer’s pledge finances demand that the provider must meet with heavy investment. The provider’s free cash flow and your contract horizon are linked. This coupling belongs in supplier evaluation.

This article does not imply any credit rating of these corporations. All three remain highly profitable and fast-growing. It describes a financing profile and its impact on contract decisions. Default probability cannot be inferred from these quarterly figures.

The companies do not state whether or when the investment phase will return positive free cash flow. That timing remains open. For a multi-year commitment, therefore, the ability to withstand alternative scenarios for capacity and terms is decisive. The decision rests with the person responsible for the investment.

No list-price increases or revised terms were announced in the disclosures. Region-specific statements about DACH capacity are also absent. Both gaps reduce planability over the contract period. The investment committee must work with these open items.

Concentration Risk and the Performance of a Second Source

Focusing on a single provider consolidates financing profile, scarcity, and contract duration. AWS’s order backlog at two to three times annual revenue amplifies this consolidation. A second source distributes supplier risk across two financing profiles but does not replace an evaluation of individual commitments.

Microsoft serves as a contrasting case with positive free cash flow, altering the logic of concentration. Two providers with differing cash flow profiles reduce dependence on a single investment phase, though they do not diminish the total obligations on the customer side. Each commitment remains a distinct line item in the investment calculation.

The growth rates underscore demand. In the same quarter, AWS, Azure, and Google Cloud grew by 37, 43, and 82 percent respectively. Profitability and negative free cash flow occur simultaneously. This distinction prevents a doomsday narrative and keeps focus on the financing profile.

„Even at that amount, we will still not have enough capacity to meet all of the demand we have in 2026 … I believe this dynamic will also be true in 2027 too.“

Andy Jassy, President and CEO of Amazon

The Key Metric for the Next Twelve Months

In twelve months, it’s worth reassessing the free cash flow of the three providers. The direction of free cash flow indicates whether investment velocity continues to outpace earnings power. Additionally, order backlog relative to annualized revenue and outstanding lease obligations are critical. These three metrics form the minimum supplier profile for evaluation.

The 2026 plans stand at approximately €191.7 billion for Amazon, €170–179 billion for Alphabet, and €152.5 billion for Microsoft. Comparing actual investments against these projections sharpens the assessment for the next contract cycle.

Frequently Asked Questions

Does negative free cash flow at Amazon and Alphabet indicate weak earnings power?

No. AWS grew by 37 percent in the June 2026 quarter, while Google Cloud surged by 82 percent. Google Cloud increased its operating result to around €7.7 billion. The negative free cash flow stems from the pace of investment.

Why is Microsoft the counterexample in this analysis?

Microsoft reported positive free cash flow of around €17.1 billion in the quarter. At the same time, investments rose by over 70 percent to around €35.7 billion. The counterexample shows that investment levels and free cash flow can diverge.

What do Microsoft’s unsigned lease agreements mean?

Microsoft disclosed data-center lease agreements totaling around €286.8 billion that have not yet commenced. These represent obligations entered into without any prior consideration. The figure adds future fixed costs to the positive free cash flow.

Can a credit rating be derived from these figures?

No credit rating can be inferred. All three corporations remain highly profitable. The article describes a financing profile and its impact on multi-year commitments.

Are there verified statements about capacity in Germany, Austria, or Switzerland?

The disclosures contain no region-specific capacity information for the DACH region. Likewise, no verified announcement of list-price increases or revised terms is provided. Both points remain open and should be treated as assumptions in multi-year planning.