AWS Backlog Tops $496 Billion, Fueling Amazon's Cloud Computing Growth
Amazon's cloud computing wing, Amazon Web Services (AWS), has reached an impressive backlog of $496 billion during the second quarter. This figure represents a significant portion of Amazon's revenue and is a testament to the growing demand for cloud computing services.
AWS generated 60% of Amazon's operating income in Q2, despite making up only 21% of its sales. This indicates that AWS has a significantly higher profit margin than Amazon's e-commerce business. The company plans to spend $220 billion on capital expenditures this year, with nearly all of it going towards building out data centers to meet increasing demand.
The backlog is so large that it would take AWS nearly 12 quarters or three years to fulfill at its current run rate of $42.2 billion per quarter. CEO Andy Jassy noted during the conference call that Amazon will not be able to fulfill demand in 2026 and expects the same in 2027, with 2028 demand already appearing.
Due to this strong growth trajectory, many analysts believe that Amazon is a prime candidate for investment, especially at its current price of under $270 per share. While some may argue that investing in Amazon is not without risks, its position as one of the leading players in the cloud computing industry makes it an attractive option for those looking to diversify their portfolios.