AWS will be a $1T business, Jassy says. But first, it will spend big.
Amazon wants to be the king of AI cloud computing and become the first $1 trillion revenue business. But to do that it will have to continue on its capex spending spree, its CEO said Thursday.
Andy Jassy, Amazon Web Services (AWS) CEO, is confident that AWS can become a trillion-dollar revenue business. During Amazon's quarterly earnings call, Jassy reiterated this ambition, stating, "What we're building at Amazon is unlike anything that's ever been seen before. There has never been a business with a trillion dollars of annual revenue."
However, before AWS reaches that milestone, Amazon plans to increase capital expenditures to build the necessary infrastructure to support the growing business. Jassy revealed that Amazon expects to spend approximately $220 billion on capital expenditures in 2026, with even more spending in 2027, with a clear line of sight to attract financial returns.
The big spending on AI infrastructure has raised concerns among investors this year. During the call, analysts repeatedly asked Jassy about the spending, signals of growth, and expected profit margins. Jassy assured them that the spending is well-invested, as Amazon plans to capitalize on a historic moment in global cloud demand driven by AI.
AWS revenue increased by 39% from the previous year, a trend of steady growth for the sixth consecutive quarter. Jassy forecasted that AWS would increase by 40% not just next year but in 2028 as well. He emphasized that AWS is currently a $184 billion annualized revenue run-rate business, but the opportunities remain extraordinary.
With continued innovation, new core and AI functionality, and the capacity being added each year, Jassy believes AWS can grow by more than 40% in 2027 and 2028, potentially reaching a trillion-dollar revenue business in the next five to 10 years. Jassy also noted that the company is in the early days of AI adoption by enterprises and that the strategy is working so far.
When asked about the substantial investment needed to grow AWS, Jassy called the AI boom a "once in a lifetime opportunity" that warranted such a significant financial commitment. However, investors remained concerned, with shares down about 6% in after-market trading on Thursday. The AI boom has been a mixed blessing for the cloud industry, as cloud providers, including Amazon, are spending big but also earning big.
Microsoft, for instance, recently posted record-breaking revenue growth, driven largely by its cloud business, and has also spent a considerable amount.
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