Amazon’s 2026 capital expenditures are being driven primarily by accelerated AWS AI infrastructure spending, including data centers, custom chips, and memory components. After initially guiding to $200 billion in February 2026—well above prior-year levels of roughly $132 billion—management raised the target to $220 billion in July Q2 results, citing higher memory costs. This escalation has compressed trailing free cash flow to an outflow of $7.6 billion as purchases of property and equipment surged, though strong AWS revenue growth above 36% year-over-year continues to support the outlay. Traders are monitoring Q3 results and any further revisions for signs that AI demand or cost pressures could push spending beyond the updated guidance.