Amazon’s cloud business is surging — and so is its capital spending

Amazon was one of several tech giants to beat Wall Street’s first-quarter profit estimates on Wednesday, providing more financial evidence that the AI ​​boom continues to reward companies that provide the picks and shovels.

Amazon’s cloud business is the latest example. Amazon Web Services, backed by his play a role in fueling the AI ​​boomsaw net sales rise 28% year over year to $37.6 billion, the company said Wednesday. It was the fastest growth rate for AWS in 15 quarters, Amazon President and CEO Andy Jassy said during the company’s earnings call.

Jassy attributed AWS’s success to its role in providing computing power to the AI ​​industry.

“It’s very unusual for companies to grow so quickly on such a large base. The last time we saw growth at this point, AWS was about half the size,” says Jassy. “We’ve never seen a technology grow as fast as AI. Amazon is already a leader and companies continue to choose AWS for AI.”

Jassy compared the growth of the business unit with the figures. “To put our growth in perspective, three years after launching AWS, it had a revenue ratio of $58 million. [During] In the first three years of this AI wave, AWS AI revenue exceeds $15 billion – almost 260 times larger.”

Even as money flows into its cloud business, Amazon is also pouring increasing amounts of capital into building out the infrastructure that supports that cloud. Jassy said on Wednesday that capital spending growth would continue in the near term.

“The faster AWS grows, the more short-term investments we will spend,” he said. “AWS needs to free up money for land, power, buildings, chips, servers and network equipment before we can make money from it.”

Jassy positioned these investments as short-term cash burn for a long-term payoff, noting that these capital expenditures finance assets such as data centers that last more than 30 years or chips, servers and networking equipment that have a useful life of five to six years.

Jassy sought to allay investor fears that the e-commerce giant was spending too much on infrastructure. He also gave more than a hint at how these types of expenses would impact free cash flow.

“In times of very high growth like now – where capex growth is significantly greater than revenue growth – free cash flow is being challenged in the early years,” he said.

Amazon’s first-quarter earnings report reflects pressure on free cash flow. The company reported that free cash flow fell to $1.2 billion over the trailing twelve months, mainly due to a year-over-year increase
of $59.3 billion in real estate and equipment purchases – much of it related to AI. That’s a 95% decline from the $25.9 billion in free cash flow it had in the first quarter of 2025.

“We’ve been through this cycle with the first big wave of AWS growth and have been impressed with the results. We expect to feel the same way about this next wave, with much greater potential downstream revenue and free cash flow,” he added.

That of the e-commerce giant total salesmeanwhile, rose 17% to $181.5 billion year-over-year. Sales grew 12% in North America and 19% in the rest of the world, the company reported.