Amazon Pours Concrete on $496 Billion AWS Backlog

Amazon's AWS backlog has reached $496 billion, growing at triple-digit rates year over year. The company's management team is committing around $200 billion in capital expenditures for 2026 against real contracts. This reflects their confidence in future demand, which is already booked with customers pre-committing years of capacity.

The economics of Amazon's data centers and servers work in its favor. With a useful life of over 30 years and a break-even point of less than three years, followed by at least five to six years of operation, this creates a compounding annuity that makes the company's capex line attractive.

Amazon's AI and custom chip businesses have each cleared a run rate of over $25 billion, growing at triple-digit rates. Trainium2 is fully subscribed, and Anthropic has committed up to 5 GW while OpenAI has committed about 2 GW starting in 2027. The company's balance sheet is strong, with a debt/equity ratio of 0.37 and an interest coverage ratio of 35.17.

What sets Amazon apart from its competitors Microsoft and Alphabet is its vertically integrated chip stack. Graviton is used by 98% of Amazon's top 1,000 EC2 customers, giving the company optionality that the market has not priced in.