AWS installs an AI accelerator every 14 seconds and eyes $1 trillion annual revenue

Amazon Web Services (AWS) aims to become a trillion-dollar business within the next decade, driven by the rapid growth of artificial intelligence (AI) applications. Amazon CEO Andy Jassy anticipates a 40% or greater increase in AWS revenue by 2027 or 2028. Currently, AWS projects to generate $184 billion in annual revenue for the current financial year, fueled by a 39.3% year-over-year growth rate. Q3 revenue reached nearly $46 billion, marking a slight shortfall from the target.

Despite the majority of global IT spending still occurring on-premises, Jassy asserts this trend will shift within the next 10-20 years. He highlights that conventional workloads, such as mainframes and storage area networks, are now transitioning to the cloud. AI is expected to accelerate this transition, as AWS installs an AI accelerator every 14 seconds. Bedrock AI services, a core component of AWS, is among the fastest-growing multi-billion dollar services in its history.

Core compute and storage services are also experiencing significant growth, with revenue expanding at its fastest rates in several years. Jassy emphasizes that AI workloads necessitate proximity to existing data and applications, driving demand for AWS's core services. He attributes this interdependence to the performance improvements in Bedrock and core services. Jassy predicts that AI services will maintain higher margins compared to AWS's core services during their early growth stages.

The company anticipates $220 billion in capital expenditure for 2026, with $75.9 billion already spent in the previous quarter, primarily on AWS infrastructure. Jassy acknowledges the challenges in financing these investments but remains confident in the transformative potential of AI. He emphasizes that this acceleration is necessary and will significantly impact Amazon's revenue, free cash flow, and overall leadership position.