📰 Key Takeaways

On Amazon’s Q3 earnings call, Andy Jassy reiterated his belief that AWS can become a business with $1 trillion in annual revenue, stressing that no company has ever reached that scale. But before getting there, Amazon has to ramp up capital spending sharply to build out infrastructure. He said 2026 cash capex is still expected to be about $220 billion, with most of it going to AWS, and that 2027 will be “noticeably higher.” He added that he has clear visibility into the financial returns.

On the operating numbers, AWS revenue grew 39% year over year, marking its sixth straight quarter of solid growth, and its annualized revenue run rate now stands at $184 billion. Jassy projected that AWS will grow more than 40% in both 2027 and 2028, and become a $1 trillion revenue business within the next five to ten years. He thinks enterprise AI adoption is still at a “very early” stage, and that the current strategy is working. Growth is coming from continued innovation, new core and AI capabilities, enterprises wanting to move their core and AI workloads onto AWS, and new capacity added every year.

As Wall Street analysts kept pressing him on the reasons for the spending, the growth signals, and the expected margins, Jassy described this AI wave as a “once-in-a-century opportunity” worth investing huge sums in right now. He said the company can afford to fund the effort itself, and believes it will change Amazon’s scale and revenue for good. Investors are still nervous, though, and Amazon’s stock fell about 6% in after-hours trading. The article also notes that other cloud providers like Microsoft are investing heavily too while posting strong results, and Microsoft just reported another record quarter of revenue growth, driven mainly by its cloud business.

💬 JudyAI Lab Take

Andy Jassy said on Amazon’s earnings call that AWS could become a business with $1 trillion in annual revenue, but first it has to spend about $220 billion in capex in 2026, and even more in 2027. AWS revenue grew 39% year over year, yet the stock dropped about 6% after hours. This is a big bet worth watching.

This news shows the AI infrastructure race is still speeding up. Jassy thinks enterprise AI adoption is still at a “very early” stage, so what Amazon is investing in now is capacity for the next five to ten years, not for the orders in front of it today. The capital market’s reaction is interesting: the growth numbers look great, but analysts kept asking about the reasons for the spending and the margins. That tells us the market is willing to pay for growth, but it wants to see a clear path to returns. For AI builders, the big cloud players are treating compute as a long-term strategic resource and keep expanding it, and Microsoft also posted record cloud revenue. That suggests the supply of underlying compute will only get more abundant. What will really set people apart is who can turn all that compute into applications users are willing to pay for.

We’d suggest taking stock of your own AI projects, thinking about which workflows could scale up in value once compute gets more abundant, and trying to work out a clear cost and return for each project.

📅 Original Article Info

🔗 Further Reading