Amid surging demand for artificial intelligence, Amazon has increased its projected 2026 cash capital expenditure to approximately $220 billion, up from about $200 billion. The higher investment is largely driven by rising memory costs as the company continues expanding its AI infrastructure.
Amazon Web Services (AWS) reported its fastest growth in 18 quarters, with revenue increasing by 36.7% year-on-year to $42.2 billion. Despite the significant investment, Amazon CEO Andy Jassy said AI infrastructure capacity is expected to remain constrained through 2027, while customer demand is already extending into 2028.
Jassy explained that the additional spending is mainly due to the rising cost of memory chips and ongoing supply volatility. Industry analysts noted that the biggest challenge for cloud providers is no longer attracting customers but delivering enough compute, networking, power and data center capacity to meet growing demand.
Amazon’s AWS backlog reached $496 billion, recording triple-digit year-on-year growth and providing strong visibility into future infrastructure demand. The company also plans to double its power capacity by the end of 2027 compared to 2025, with much of its planned 2027 capacity already reserved.
During the earnings call, Jassy said AI investments are focused on long-term infrastructure. While data centers generally begin generating revenue about 2 years after investment, they can remain productive for more than 30 years. Servers and networking equipment typically recover their costs in less than 3 years before generating strong free cash flow.
Jassy added that AWS could “very possibly” become a trillion-dollar annual revenue business in the future.
Amazon also highlighted that AI workloads are increasing demand for traditional cloud services such as compute, storage, reinforcement learning, post-training workloads, agent orchestration and vector databases. The company reported growing adoption of its custom AI chip, Trainium, with multi-year, multi-gigawatt commitments from Anthropic and OpenAI. Amazon is also exploring selling Trainium chips outside AWS due to rising customer interest in deploying them in third-party data centers.
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