Amazon was one of several tech giants to beat Wall Street’s first-quarter earnings expectations on Wednesday, offering more financial evidence that the artificial intelligence boom continues to reward companies that supply picks and shovels.
Amazon’s cloud business is the latest example. Amazon Web Services, powered by Amazon role in fueling the AI boomsaw its net sales rise 28% year over year to $37.6 billion, the company said Wednesday. It was the fastest growth rate for AWS in 15 quarters, Amazon Chairman and CEO Andy Jassy said during the company’s earnings call.
Jassy attributed AWS’s success to its role in providing computing to the artificial intelligence industry.
“It’s very unusual for businesses to grow so quickly on such a large base. The last time we saw growth at this clip, AWS was about half the size,” Jassy said. “We’ve never seen a technology grow as fast as AI. Amazon is already a leader, and companies continue to choose AWS for AI.”
Jassy compared business unit growth to growth. “To put our growth in perspective, three years after launching AWS, it had a revenue rate of $58 million. [During] in the first three years of this AI wave, AWS’ AI revenue run rate is over $15 billion — nearly 260 times greater.”
Even as money flows into its cloud business, Amazon is also sinking ever-larger amounts of capital into building the infrastructure that supports that cloud. Jassy said on Wednesday that the increase in capital spending will continue in the near term.
“The faster AWS grows, the more short-term capital we’ll spend,” he said. “AWS has to put up cash for land, power, buildings, chips, servers and networking equipment before we can earn it.”
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Jassy positioned these investments as a short-term cash burn for a long-term payback, noting that these capital expenditures finance assets such as data centers that last more than 30 years or brands, servers and networking equipment that have a useful life of five to six years.
Jassy sought to allay investor fears that the e-commerce giant was spending too much on infrastructure. It also provided more than a hint of how this type of spending will affect free cash flow.
“In periods of very high growth like now – where capital growth significantly exceeds revenue growth – in the early years, free cash flow is challenged,” he said.
Amazon’s first-quarter earnings report reflects the drive for free cash flow. The company reported that free cash flow fell to $1.2 billion for the trailing twelve months, mainly due to year-over-year growth
$59.3 billion in real estate and equipment purchases — much of it related to artificial intelligence. That’s a 95% drop from the $25.9 billion in free cash flow it had in the first quarter of 2025.
“We’ve been through this cycle with the first big wave of AWS deployment and we like the results. We expect to feel the same way about this next wave with much bigger potential downstream revenue and free cash flow,” he added.
The e-commerce giant total salesmeanwhile, it rose 17% to $181.5 billion year over year. Sales rose 12 percent in North America and 19 percent worldwide, the company said.
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