AWS Growth Bolsters Amazon’s Case for $220 Billion Spending Plan
Amazon lifts its 2026 capital budget 10% to $220 billion as AWS posts its fastest growth in 18 quarters.
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Amazon has raised its 2026 capital spending forecast by 10% to $220 billion after the cloud business reported its fastest growth in more than four years, reflecting continued demand for artificial intelligence infrastructure.
Amazon Web Services (AWS) revenue rose 37% to $42.2 billion in the second quarter ended June 30, accelerating from 28% growth in the previous quarter. AWS operating income increased to $16.6 billion from $10.2 billion a year earlier.
The company had previously expected capital spending of $200 billion. Chief Executive Andy Jassy said the increase was largely linked to higher memory-chip costs and would also support investments in data centers, semiconductors, robotics and satellites.
“Even at that amount, we will still not have enough capacity to meet all of the demand we have in 2026,” Jassy told investors. He said capacity constraints were likely to continue in 2027, while demand already committed for 2028 was substantial.
Amazon said its AI and chip businesses had each exceeded annualized revenue run rates of $25 billion. AWS’s contracted backlog reached $496 billion at the end of the quarter, up from $364 billion three months earlier.
Companywide net sales rose 20% to $200.6 billion from $167.7 billion a year earlier, exceeding analysts’ expectations of about $197 billion.
Net income increased to $62.6 billion, or $5.75 per diluted share, from $18.2 billion a year earlier. The result included $53.4 billion in non-operating pretax income, primarily from Amazon’s investments in AI developer Anthropic.
The spending increase is placing pressure on cash generation. Amazon reported negative free cash flow of $7.6 billion for the 12 months through June, compared with positive free cash flow of $18.2 billion a year earlier.
Amazon forecast third-quarter sales of between $197 billion and $202 billion, below the $203.9 billion average analyst estimate reported by FactSet. Its shares rose more than 9% in extended trading following the results.
