Jassy: AWS Will Be a Trillion-Dollar Business, but Amazon Must Spend Heavily First

Amazon CEO Andy Jassy repeated on Thursday, during the company's quarterly earnings call, his belief that Amazon Web Services (AWS), its cloud computing division, can become a business with $1 trillion in annual revenue within the next five to 10 years. To get there, Amazon must first increase capital spending on the data centers and other infrastructure needed to support that growth, a point that matters to investors, who have worried about the outlay all year.

Spending set to keep rising

Jassy said Amazon still expects 2026 cash capital expenditure of roughly $220 billion, most of it for AWS, and anticipates meaningfully higher spending in 2027. He said the company has a clear line of sight to the financial returns.

Wall Street analysts on the call repeatedly asked him to explain the spending, the signals that growth will materialize, and the profit margins to expect. Jassy answered that the money is well spent because the company intends to capitalize on a historic moment in cloud demand driven by artificial intelligence. He called the AI boom a "once in a lifetime opportunity" and said Amazon can fund the plan.

Growth forecasts

AWS revenue rose 39% from the same quarter a year earlier, the sixth consecutive quarter of steady growth. According to Jassy, AWS has an annualized revenue run rate of $184 billion. He forecast that growth will exceed 40% in each of 2027 and 2028, and said enterprises are only in the very early days of adopting AI and that the strategy is working so far.

Market reaction

Investors stayed cautious: Amazon shares dropped about 6% in after-market trading on Thursday. Other cloud providers are also spending heavily while earning heavily. Microsoft, for example, just reported another record revenue increase driven largely by its cloud business, and it has also spent a great deal.