- AWS revenue grew by 28% – it is now a fifth of Amazon’s total revenue
- Industry partnerships and in-house chips impress customers
- Capex will remain high in the “early years” of the AI boom
Amazon’s revenue rose 17% year-over-year to $181.5 billion, driven largely by 28% year-over-year growth in AWS revenue to $37.6 billion, with the cloud business now accounting for about a fifth of the company’s total revenue.
In fact, this is the fastest growth rate in 15 quarters (almost four years), and AWS’ significant upward momentum was largely driven by the company’s continued spending on AI, with the company’s AI services already at around $15 billion in annual revenue.
Ongoing partnerships with the likes of Anthropic and OpenAI, including yesterday’s announcement of an expanded partnership with OpenAI, only serve to strengthen AWS’s position in the cloud market.
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AWS revenue continues to skyrocket
Despite consistently high income, Amazon still plans to spend plenty of cash. Q1 capex hit as much as $44 billion, with the company targeting around $200 billion in the full fiscal year of 2026 as it continues to invest in AI data centers.
“It’s very unusual for businesses to grow this quickly on such a large base,” CEO Andy Jassy said on the earnings call. “The last time we saw growth at this clip, AWS was about half the size.” Compared to three years after the launch of AWS, when it had a revenue of 58 million dollars, the company is now about 260 times larger.
He described it as a unique opportunity to support long-term earnings, where this heavy upfront investment is likely to pay off in the long run. A continued push to develop in-house chips is also designed to reduce costs by reducing reliance on Nvidia.
“The faster AWS grows, the more short-term capex we will spend,” Jassy added, acknowledging that “free cash flow is challenged” in the “early years” and during times of high growth.
Looking ahead, the company predicts a further 16-19% increase in total revenue next quarter, but it remains to be seen how much AWS will grow.
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