Amazon expects cloud revenue to surge over 40% annually in 2027 and 2028 as enterprise artificial intelligence integration accelerates. To meet this anticipated demand, the tech giant plans to pour approximately $220 billion into capital expenditures in 2026, targeting even higher spending the following year. However, Wall Street analysts voiced persistent skepticism regarding the scale of these investments and their ultimate impact on profitability. The intense scrutiny led to an immediate drop of around 6% in Amazon shares during after-market trading.
Key points
Amazon is positioning its cloud division to capture long-term revenue growth through mass…: Amazon is positioning its cloud division to capture long-term revenue growth through massive upfront investments in artificial intelligence hardware.
Andy Jassy defended the substantial infrastructure spend as a crucial step to monetize on…: Andy Jassy defended the substantial infrastructure spend as a crucial step to monetize once-in-a-lifetime enterprise cloud demand.
Wall Street remains cautious as analysts weigh rising capital outlays against future prof…: Wall Street remains cautious as analysts weigh rising capital outlays against future profit margins and concrete returns on investment.
Sources checked by our analysis pipeline: 1
Andy Jassy has made it known that he believes AWS can be a trillion-dollar revenue business. During Amazon’s quarterly earnings call on Thursday, he repeated this ambition.
“What we’re building at Amazon is unlike anything that’s ever been seen before. There has never been a business with a trillion dollars of annual revenue,” he said.
However, before the cloud business gets there, Amazon is going to have ramp up its capital expenditures to build out the infrastructure necessary to support that blossoming business.
“We still expect 2026 cash capex of approximately $220 billion — the majority for AWS — and expect to spend meaningfully more in 2027, with a clear line of sight to attract its financial returns,” Jassy revealed on Thursday.
Amazon’s big spending on its AI infrastructure buildout has been an ongoing source of concern for investors this year. Indeed, during Thursday’s call, Wall Street analysts repeatedly asked Jassy to explain the spending, the signals that the growth really will come, and the profit margins expected.
Jassy told them it was all money well spent because the e-commerce…
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