Jassy says AWS can become $1 trillion revenue business

Amazon Amazon.com, Inc. ↘ 1.60% CEO Andy Jassy said Thursday that Amazon Web Services could become a business with more than $1 trillion in annual revenue within five to 10 years. He also said the company will keep spending heavily on infrastructure, with roughly $220 billion in capital expenditures planned for 2026 and "meaningfully more" in 2027, according to Yahoo Finance. The forecast came on a hard day for the stock. Shares fell in extended trading after third-quarter earnings and revenue came in below Wall Street estimates, CNBC reported.finance.yahoo.com+1

Growth targets and backlog

AWS sales rose 39% from a year earlier to $46.0 billion in the quarter. That was its fastest growth in nearly five years and puts the unit at a $184 billion annualized run rate, Amazon said. "We believe that AWS can grow north of 40 percent in each 2027 and in 2028, and be a trillion-dollar revenue business in the next five to 10 years," Jassy said on the call.press.aboutamazon.com+1

Jassy pointed to a $578 billion AWS backlog that is growing at a triple-digit rate from a year earlier. He said the largest customers reserve capacity in blocks as large as a gigawatt, which gives Amazon "very good visibility" into 2027, 2028 and part of 2029, GeekWire reported. The forecast is far above where it stood in March. At that time, Jassy told employees AWS could reach at least $600 billion in annual revenue in about a decade, GeekWire noted. He added that Amazon's stores business could also reach $1 trillion.geekwire.com+1

The cost of the buildout

Cash capital spending reached $75.9 billion in the third quarter, mostly for AWS and AI. Free cash flow over the trailing 12 months was negative $42.4 billion. A year earlier it was positive $14.8 billion. Amazon has raised $115 billion in long-term debt this year, and its quarterly interest expense more than tripled to $1.7 billion.marketbeat.com+1

Third-quarter net income was $20.69 billion, or $1.89 per share. Revenue of $201.94 billion was just below the $202.31 billion analysts expected. Operating income rose to $28.1 billion, giving Amazon a 13.9% operating margin, the highest in its history. For the fourth quarter, the company expects sales of $240 billion to $247 billion.cnbc.com+1

Investors press on returns

Analysts on the call repeatedly asked Jassy to justify the spending, according to Yahoo Finance. Morgan Stanley ↘ 2.33% analyst Brian Nowak noted that it is "pretty rare" for Jassy to make such a long-range projection. Jassy called AI a "once in a lifetime opportunity." Rivals such as Microsoft ↘ 1.18% are also spending large sums on cloud capacity.finance.yahoo.com+1

"We can fund this plan, and I think it will forever change the size of Amazon," Jassy said. "It will forever change our revenue."