Andy Jassy stated that AWS has ‘the potential to be a $1 trillion revenue business,’ up from prior expectations of a few hundred billion. AWS finished the quarter at a $169 billion annualized run rate, growing 36.7% — the fastest in 18 quarters and the fifth consecutive quarter of acceleration. Operating income grew 64% to $16.6 billion, with a margin of 39.4%, up 650 basis points year-over-year.

Microsoft is the fair comparison because neither owns the frontier model and both sell custom silicon against Nvidia’s margin. AWS compounds at 37% from the largest pure-cloud base profitably. However, AWS‘s backlog of $496 billion is the smallest of the three major cloud providers, behind Microsoft’s $678 billion partly due to OpenAI‘s early Azure commitment. Amazon came later to Anthropic and OpenAI deals, though multi-gigawatt Trainium commitments have since been made.

Amazon is funneling every dollar of free cash flow into capital expenditure and borrowing, diverging from Microsoft’s more cautious route. Trailing free cash flow fell from positive $18.2 billion a year ago to negative $7.6 billion. Amazon spent $53.1 billion in capex and raised its 2026 plan from $200 billion to $220 billion, blaming memory prices. Microsoft spent $35.8 billion of cash capex with Amy Hood framing the share as optionality she can throttle. Amazon is now spending more on infrastructure than the whole company generates in cash.

Jassy defended the spending by noting data centers absorb capital two years before earning anything, then last 30 years or more. Servers break even in under three years with five-to-six-year lives against AI capacity contracted for at least five years. He described AI adoption as barbelled: labs consume ‘gobs and gobs of compute’ at one end, enterprises harvest cost savings at the other. The middle — current enterprise production workloads that mostly don’t yet use inference pervasively — ‘will be the largest absolute segment.’ Jassy conceded: ‘I don’t know if the trajectory of that middle part of the barbell will be the same wildly steep trajectory that we’ve seen with the current barbelled AI Labs piece.’ If that middle segment arrives quickly, AWS could push past the trillion-dollar revenue mark.