During its recent earnings call, Amazon announced it is raising its 2026 capex budget to $220 billion, a meaningful increase from the previously stated $200 billion, driven by higher memory costs. CEO Andy Jassy says the spending is required to build out new data centers and bring more AI capacity online. In the trailing 12 months ending with the second quarter, Amazon's free cash flow swung to an outflow of $7.6 billion, driven by a $66.1 billion year-over-year increase in property and equipment purchases, mostly tied to AI infrastructure. Amazon Web Services saw revenue reach $42.2 billion in the quarter, up 37% year over year, while operating income jumped 64% to $16.6 billion. Jassy explained that data centers have useful lives of 30 years or more, and inside each facility, Amazon can cycle through five or six generations of servers. After the first generation, unit economics improve because the initial capital outlay does not have to be repeated. In the long run, Jassy expects Amazon's data centers to generate compelling returns despite current pressures.