Amazon's $220B AI Bet: Will the Payback Come Soon?

Amazon's spending on its AI efforts is set to reach $220 billion by 2026, with much of that going towards its cloud arm, AWS. While AWS growth is impressive, at 36.7% in Q2 2026, it's not clear if the payback from this spending will materialize soon.

The company's management still claims that its stores are getting cheaper to run, but the focus has shifted to AWS and AI. The cost to serve each unit has fallen globally, thanks to regionalization, which brings inventory closer to buyers and speeds up delivery. However, this trend is no longer a major talking point in investor calls.

AWS revenue grew 19.7% in 2025, outpacing North America's growth of 10.0%. The cloud arm now accounts for a significant portion of Amazon's revenue, and its backlog has more than doubled to $496 billion. Management expects demand to outstrip capacity through 2026, but the payback from AWS spending may take years.