Five companies command market values around $3 trillion or more: chipmaker Nvidia, Apple, Alphabet, Microsoft, and Amazon (AMZN -0.55%). Four of them pay quarterly dividends.
Amazon is the exception, and it always has been. The e-commerce and cloud computing giant has never paid a dividend, and it joined this group only recently, crossing the $3 trillion line for the first time on Aug. 3.
The reason has little to do with how much cash comes in the door. What's missing is anything left over once the company finishes spending.
Where does all of that cash go?
Image source: Amazon.
Four payers and a holdout
Among the other four, dividends are settled business. Microsoft, Apple, and Nvidia all pay them, and Alphabet, the group's newest payer, initiated its first-ever dividend in April 2024, alongside a $70 billion buyback authorization.
Amazon, by contrast, currently returns nothing to shareholders in any form. There's no dividend. And the company's one buyback program, a $10 billion authorization from March 2022, has sat idle -- no shares were repurchased in 2023, 2024, or 2025, and $6.1 billion of it was still available at the end of last year.
For income investors, that means there's nothing here, and there likely won't be for years to come.
The cash is spoken for
The money Amazon isn't paying out is easy to find. Management expects about $220 billion of capital expenditures this year, most of it aimed at artificial intelligence (AI) and cloud capacity. That figure was $200 billion as recently as February, before rising memory prices pushed it higher. And it caps a steep climb. Amazon's net cash spending on property and equipment was about $48 billion in 2023, about $78 billion in 2024, and about $128 billion in 2025.
All of that spending now exceeds what Amazon's operations bring in. Operating cash flow rose 33% year over year to $161.4 billion over the trailing 12 months. Free cash flow (what remains after capital spending) swung to an outflow of $7.6 billion over the same stretch, compared with an inflow of $18.2 billion a year earlier. The swing came from purchases of property and equipment running $66.1 billion higher than the year before.
For perspective, Alphabet generated about $69 billion of free cash flow in 2023, the year before it started paying a dividend. Amazon produces far more cash from operations than Alphabet did then, and it still ends up below zero once the data centers are paid for. I'd argue those two numbers are the whole explanation.
Nor does management sound ready to slow down. CEO Andy Jassy told investors on the company's July 30 earnings call that even $220 billion won't buy enough capacity to meet this year's demand, and that he believes the same will be true in 2027.
Should shareholders mind?
The case for the build-out is in what the spending is already producing. Amazon Web Services (AWS) revenue rose 37% year over year to $42.2 billion in the second quarter -- growth that management said was its fastest in 18 quarters. And in the earnings release, Jassy said AWS is "booming," noting that the company's AI and chips businesses "each eclipsed run rates of more than $25 billion" annually.
The profits are following. Operating income climbed 43% year over year to $27.5 billion in the second quarter, with AWS contributing $16.6 billion of that. Net income more than tripled to $62.6 billion, though most of the jump came from a one-time source -- $53.4 billion of non-operating income, primarily gains tied to the company's Anthropic investments.
NASDAQ: AMZN
Key Data Points
Sure, the stock isn't obviously cheap. Shares trade around $276 as of this writing, about 4% off their record high.
Measured against the earnings analysts expect over the next 12 months, the price comes to about 30 times. The ratio on the past year's earnings looks cheaper, but only because those earnings include the windfall.
But a company growing revenue 20% at Amazon's size, with its most profitable segment accelerating, can grow into a price like that.
Ultimately, the missing dividend is a choice, and it's an easy one to understand. Amazon isn't withholding cash from shareholders out of stinginess. Instead, there is simply no free cash flow to spare after the build-out, and the company is betting that a dollar of AI capacity earns more than a dollar of payout ever could. As long as AWS keeps compounding at rates like the second quarter's, I think that bet is defensible.
