Prime Highlights
- Amazon’s cloud business delivered a strong fourth quarter, with rising demand for artificial intelligence services pushing AWS revenue, profits, and margins above market expectations.
- The company signaled aggressive long-term investment in AI infrastructure, highlighting plans to sharply expand computing capacity amid intensifying competition in the cloud market.
Key Facts
- AWS reported fourth-quarter revenue of $35.58 billion, up nearly 24% year on year, and operating income of $12.47 billion, with an operating margin of 35%.
- Amazon plans to spend about $200 billion in 2026, primarily on AI infrastructure, and aims to double AWS computing capacity again by the end of 2027.
Background
Amazon reported a strong performance from its cloud business in the fourth quarter, as rising demand for artificial intelligence services pushed revenue and profits above market expectations. The company said on Thursday that Amazon Web Services (AWS) generated $35.58 billion in revenue, marking an increase of nearly 24% from a year earlier and topping analysts’ estimates.
AWS accounted for about 17% of Amazon’s total quarterly revenue but delivered the bulk of its profits. Operating income from the cloud unit reached $12.47 billion, exceeding market forecasts and helping lift Amazon’s overall earnings. AWS also improved its operating margin to 35%, up slightly from the previous quarter.
Amazon continues to lead the global cloud infrastructure market, which it helped create nearly two decades ago. However, competition is heating up as rivals invest heavily in AI.
Alphabet recently reported a 48% jump in Google Cloud revenue, its fastest growth since 2021, while Microsoft said revenue from Azure and related services rose 39%.
During the quarter, AWS launched Nova Forge, a new service that allows customers to access Amazon’s generative AI models during training for deeper customization. The company also pointed to OpenAI’s $38 billion spending commitment, showing strong demand for powerful computing.
AWS CEO Matt Garman said the company added almost four gigawatts of computing capacity in 2025. Amazon CEO Andy Jassy noted that AWS plans to double that capacity again by the end of 2027.
Looking ahead, Amazon expects to spend $200 billion in 2026, with most of the money going toward AI infrastructure to meet growing customer demand.
