Amazon Cloud Growth Accelerates, but Costs Mount

Amazon's cloud division, Amazon Web Services (AWS), delivered its best quarter in years, beating revenue estimates and growing 37% to $42.2 billion.

The company's operating profit at AWS jumped 64% to $16.6 billion, with margins expanding to 39.4%. The backlog swelled to $496 billion, up 36% quarter over quarter.

CEO Andy Jassy framed the quarter in historic terms, noting that Amazon added more than $4.6 billion in sequential revenue, roughly 80% more than its previous largest increase.

The growth story comes with a price tag, however, as Amazon raised its 2026 capital expenditure target from $200 billion to $220 billion, driven by soaring memory-chip costs and the race to expand AI-ready data center capacity.