Amazon’s cloud business is growing – and so is its capital expenditure

Amazon was among the tech giants on Wednesday that beat Wall Street’s expected first-quarter earnings, providing more financial evidence that the AI ​​boom continues to reward companies with picks and shovels.

Amazon’s cloud business is a recent example. Amazon Web Services, buoyed by its role in driving the AI ​​boom, saw its sales rise 28% year over year, to $37.6 billion, the company said Wednesday. It was AWS’ fastest growth rate in 15 locations, Amazon president and CEO Andy Jassy said during a company call.

Jassy said the success of AWS has contributed to providing computing to the AI ​​industry.

“It’s very unusual for a business to grow so quickly on such a large base. The last time we saw growth in this segment, AWS was almost half,” Jassy said. “We’ve never seen technology grow as fast as AI. Amazon is already a leader, and companies continue to choose AWS for AI.”

Jassy compared the growth of the business unit to malpractice. “To put our growth in perspective, three years after the launch of AWS, it had $58 million in revenue. [During] for the first three years of this AI wave, AWS’s AI spending rate is over $15 billion — nearly 260 times greater.”

Even as money flows into its cloud business, Amazon is also sinking a growing amount of money into building the infrastructure that supports that cloud. Jassy said on Wednesday that the increase in capital expenditures will continue in the near term.

“If AWS grows rapidly, we will use short-term capex,” he said. “AWS has to put up cash for land, power, infrastructure, chips, servers, and network gear, before we can monetize it.”

Jassy positioned this investment as a short-term cash burn for a long-term payoff, noting that these capital expenditure assets such as data centers that last more than 30 years or chips, servers, and network gear have a useful life of five to six years.

Jassy tried to allay investors’ fears that the e-commerce giant is spending too much on infrastructure. He also gave more than a hint of how this type of spending would affect free cash flow.

“In periods of very high growth right now – where capex growth is significantly outpacing revenue growth – early years, free cash flow is challenging,” he said.

Amazon’s first quarter earnings report shows a free cash flow. The company reported that free cash flow decreased to $1.2 billion over the next twelve months, driven primarily by year-over-year increases.
of $59.3 billion in property and equipment purchases — much of it related to AI. 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 growth for AWS, and as a result. We expect to hear the same about this next wave with huge potential for revenue and free cash flow,” he added.

The e-commerce giant’s net sales, meanwhile, rose 17% to $181.5 billion year over year. Sales grew 12% in North America and 19% globally, the company reported.