AWS Growth Propels Amazon into Top 25

Amazon's AWS segment has been growing rapidly, and its latest quarterly results are no exception. The cloud computing business posted a 37% year-over-year increase in sales to $42.2 billion, making it one of the fastest-growing segments within Amazon.

In an interview, CEO Andy Jassy praised AWS, stating that 'AWS is now a $169 billion annualized revenue run rate business,' which would place it 24th on the Fortune 500 list if it were a standalone company. This growth is significant, given that 85% of IT spending still occurs on-premises, despite the advantages of cloud computing.

As more companies move their IT spending to the cloud, AWS' growth is expected to continue at a good clip. In fact, Amazon's cloud backlog stands at $496 billion, up triple digits year over year. Additionally, the company plans to record $220 billion in capex this year, but it still isn't spending enough to meet demand for its services.

Jassy also mentioned that Amazon is increasingly relying on internally developed chips, which will help achieve operating margin gains within AWS. This could potentially lead to another lucrative growth avenue for the company, as it may start selling these chips to other corporations in the future.