- AWS revenue grew 28%: it now represents a fifth of Amazon’s total revenue
- Industry partnerships and in-house chips impress customers
- Capital spending will remain high during 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 (nearly four years), and AWS’s significant upward momentum was largely driven by continued enterprise spending on AI, with the company’s AI services already at around $15 billion in annual revenue rate.
Ongoing partnerships with companies like 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 revenue, Amazon still plans to burn through a lot of cash. First-quarter capital spending reached $44 billion, and the company plans about $200 billion through fiscal 2026 as it continues to invest in AI data centers.
“It’s very unusual for companies to grow so quickly on such a large base,” CEO Andy Jassy said on the earnings call. “The last time we saw growth at this rate, AWS was about half the size.” Compared to three years after AWS launched, when it had a revenue rate of $58 million, the business is now about 260 times larger.
He described it as a once-in-a-lifetime opportunity to support long-term income, and this heavy initial 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 near-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 an additional 16-19% increase in total revenue next quarter, although how much AWS will grow remains to be seen.
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