Amazon on Wednesday was one of several tech giants to beat Wall Street’s first-quarter profit estimates, offering further financial evidence that the AI boom continues to reward the companies that supply the picks and shovels.
Amazon’s cloud business is the latest example. Amazon Web Services saw net sales rise 28% year over year to $37.6 billion, boosted by its role in driving the AI boom, the company announced Wednesday. Amazon President and CEO Andy Jassy said on an earnings call that this was the fastest growth rate for AWS in 15 quarters.
Jassy attributes AWS’s success to its role in providing compute to the AI industry.
“It’s very unusual for a business to grow this quickly on such a large base. The last time we saw growth at this clip, AWS was about half the size,” Jassy says. “I have never seen a technology grow as fast as AI. Amazon is already the leader, and enterprises continue to choose AWS for AI.”
Jassy compared the business unit’s growth to past events. “To put our growth in perspective, in the three years since we launched, AWS had a revenue run rate of $58 million. Over the first three years of this AI wave, AWS’ AI revenue run rate was over $15 billion, an increase of almost 260 times.”
As money flows into its cloud business, Amazon is pouring increasingly large amounts of capital into building out the infrastructure that supports its cloud. Jassy said Wednesday that the increase in capital spending will continue in the short term.
“The faster AWS grows, the more short-term capital expenditures will increase,” he said. “AWS needs to secure funding for land, power, buildings, chips, servers, and networking equipment in advance of the time it can be monetized.”
tech crunch event
San Francisco, California
|
October 13-15, 2026
Jassy characterized these investments as short-term cash burn for long-term returns, noting that these capital investments fund assets such as data centers that will last 30 years or more and chips, servers and networking equipment that have a lifespan of five to six years.
Mr. Jassy sought to allay investor concerns that the e-commerce giant was spending too much on infrastructure investments. He also provided more than a hint at how that kind of spending affects free cash flow.
“In times of very high growth like we are in now, with capital investment growth significantly outpacing revenue growth, free cash flow is a challenge in the early years,” he said.
Amazon’s first-quarter earnings report reflects a decline in free cash flow. The company reported free cash flow decreased to $1.2 billion in the trailing twelve months, primarily due to year-over-year increases.
Purchases of real estate and equipment totaled $59.3 billion, much of it related to AI. This was a 95% decrease from free cash flow of $25.9 billion in the first quarter of 2025.
“We got through this cycle with the first big wave of AWS growth, and we’re happy with the results. We expect this next wave to feel the same way. Downstream revenue and free cash flow could be much larger,” he added.
Meanwhile, the e-commerce giant’s overall sales rose 17% year over year to $181.5 billion. The company reported that sales increased 12% in North America and 19% in the rest of the world.
If you buy through links in our articles, we may earn a small commission. This does not affect editorial independence.
