Amazon CEO says AWS could reach $1 trillion in yearly revenue

In short: Amazon CEO Andy Jassy says AWS could become a $1 trillion a year business, and Amazon plans to spend a lot more money first to build the needed infrastructure.

What happened

Amazon CEO Andy Jassy repeated a long-term goal during the company’s quarterly earnings call. He said Amazon Web Services, also called AWS, could reach $1 trillion in annual revenue within the next five to 10 years.

AWS is Amazon’s cloud computing business, which means it rents out computing power and storage to other companies, like renting warehouse space and electricity but for internet services. Jassy said AWS is currently at a $184 billion annualized revenue run rate.

To grow faster, Amazon expects major spending on what it calls cash capital expenditures, meaning big purchases like data centers, servers, and AI chips. Jassy said Amazon still expects about $220 billion in cash capex in 2026, with most of it going to AWS. He added that spending should go up “meaningfully more” in 2027.

Amazon said AWS revenue increased 39% compared to the same quarter a year earlier, marking the sixth straight quarter of steady growth. Jassy told analysts he expects AWS to grow by more than 40% in 2027 and 2028.

Investors have been uneasy about the size of the spending, and Amazon shares fell about 6% in after-hours trading after the call.

Why it matters

Big spending by AWS and other cloud providers affects the cost and availability of AI services that many apps and businesses now depend on. If Amazon’s bet pays off, more “behind the scenes” computing capacity could make AI tools easier to run, but the near-term risk is that profits can look worse while the company builds.

Source: TechCrunch AI