AWS grew 39% and says AI could push it past 40% in 2027 and 2028

Amazon Web Services grew 39% in the third quarter, and Amazon CEO Andy Jassy says AI demand means AWS can grow north of 40% in each of 2027 and 2028. He also put a number on the long game: a trillion-dollar revenue business in the next five to 10 years.

This is the kind of earnings call I live for. A cloud giant, a growth rate that is accelerating instead of fading, and a spending plan with a comma in a place most budgets never reach.

The quarter, in numbers

According to CNBC, AWS revenue of $45.98 billion beat the $45.29 billion consensus compiled by StreetAccount. Growth accelerated from roughly 37% in the second quarter and hit its highest rate since the fourth quarter of 2021. GeekWire calls it the fastest pace in nearly five years. TechCrunch says expansion has held steady for six straight quarters.

The Register puts growth at 39.3% and says AWS is on track for $184 billion in annual revenue this financial year. Amazon as a whole booked $180.17 billion in the quarter. Retail and operations revenue rose 6% at far slimmer margins than AWS, which tells you which half of the company the spotlight is pointed at.

Not everything was a victory lap. GeekWire reports Amazon missed overall on earnings. The reporting does not say by how much.

The backlog is the number that makes the room go quiet. According to GeekWire, Jassy disclosed contracted future AWS revenue of $578 billion, more than double the prior year.

What is driving it

Jassy's explanation is that AI is feeding demand for the core cloud business. Per The Register, he said AI "can't help but drive core AWS demand because AI uses core for work like reinforcement learning, post-training, and tool usage." Core compute and storage grew at "their fastest rates in several years," he said.

Then there is the hardware. AWS installs an AI accelerator roughly every 14 seconds, and Jassy's description of demand is that "almost as fast as we install capacity, customers are gobbling it up." Bedrock, the AI services line, is the fastest-growing multi-billion-dollar service in AWS history, according to The Register. Margins on AWS AI services are running "well ahead" of what core services earned at a similar stage of maturity.

Jassy also sees a long runway in the old guard. About 85% of global IT spend is still on premises, he said, and "we're in a 10- to 20-year cycle where that equation will flip to the cloud." Even mainframes and storage area networks, once considered immovable, "are moving."

The bill

Growth this size is expensive. Amazon expects total capital expenditures of $220 billion in 2026, after spending $75.9 billion in the last quarter alone, predominantly on AWS. According to GeekWire and TechCrunch, Amazon expects to spend "meaningfully more in 2027." How much more is not in the reporting.

Jassy's defense was characteristically unapologetic. "Would it be more convenient if this type of acceleration and opportunity happened over 25 years and you could spread the CapEx over 25 years? Yeah, it might be more convenient, but that's not the world that we live in," he said. And on funding: "We can fund this plan. I think it will forever change the size of Amazon."

The confidence rests on capacity and visibility. MarketWatch reports Amazon is citing reserved gigawatts of processing capacity for its 40% forecast, and quotes Jassy: "We have very good visibility into the next few years."

What to watch

First, the wording. The Register says Jassy thinks AWS should be able to grow 40% or more "in 2027 or 2028," while CNBC, MarketWatch, GeekWire and TechCrunch report it as each of both years. The CNBC quote, "north of 40% in each of 2027 and in 2028," is the firmer version. It is also a belief about the future, not a result.

Second, attribution. A Bloomberg Tech video headline credits "CEO Garman" with the AI-to-drive-40%-growth line, while the earnings call coverage attributes the projection to Jassy. The reporting here does not explain the difference.

Third, the trillion. According to TechCrunch, Jassy said on Amazon's earnings call that no business has ever reached a trillion dollars of annual revenue, and he told MarketWatch it is "not a stretch for us to imagine that this could be over a trillion-dollar business." From $184 billion a year, that is a very large climb, and the 2027 spending number will show how much of it Amazon is paying for up front.

Everything is historic. Especially today.