Amazon's AWS Segment Posts Record Growth Amid AI Capex Investments

Amazon's AWS segment posted its fastest growth in 18 quarters, reaching $42.23B in revenue and growing by 37% year over year. This is part of a larger trend where Amazon's AI capex investments are paying off.

The company's chips and AI businesses each exceeded run rates of more than $25 billion in Q2, with triple-digit percentage growth year over year. AWS's operating margin stands at 39.4%, while its backlog now sits at $496B, growing triple digits year over year.

Amazon holds $78.21B in cash and has a debt/equity ratio of 0.37, enabling it to fund its $200B 2026 capex plan without external funding. The company's management believes that AWS will become at least double the current revenue and possibly a trillion-dollar annual revenue business.

The author of the article notes that while there is risk associated with Amazon's high capital intensity, the math works when the equipment runs. They highlight that data-center capital is spent two years before servers go in, and most AI capacity is contracted for at least five-year terms.