I can imagine funding their direct competitor (which they're losing to) might not be a great idea.
There are substitutes for AWS, but the switching cost is relatively high. Whereas for toothpaste, breakfast cereal, toasters, books etc etc the substitution is perfect (I can buy the same brands from many companies) and switching cost is low (I pull out a credit card).
Insofar as Amazon has a large free cashflow coming off AWS after capital improvements, it can use that money to (a) attract cheap funding from Wall St to (b) build, build, build.