Amazon reported third-quarter earnings on October 29 US time. AWS revenue came in at $46 billion, up 39% year over year and two percentage points faster than the prior quarter's 37%, the quickest pace in nearly five years. Based on this quarter, AWS's annualized revenue run rate stands at $184 billion.
On the earnings call, CEO Andy Jassy offered two long-range figures: AWS revenue growth should top 40% in both 2027 and 2028, and over the next five to ten years AWS has a shot at becoming a business with $1 trillion in annual revenue.
"We can fund this plan, and I think it will forever change the size of Amazon."
Profit is catching up, but cash flow is still squeezed
AWS operating income for the quarter was $17.8 billion, up from $11.4 billion a year earlier, and the operating margin rose from 34.6% to 38.7%. Jassy said on the call that enterprise adoption of AI is still in the “very early days.”
A better gauge of demand is the contract backlog. Jassy disclosed that AWS has $578 billion in signed but not yet recognized revenue, more than double the figure a year ago. At the end of Q2 it stood at $496 billion, meaning the backlog grew by more than $80 billion in a single quarter.
On the spending side, there is no sign of a pullback. Amazon is holding its 2026 cash capital expenditure guidance at roughly $220 billion, most of it going to AWS, and said 2027 will be “meaningfully more.” The $220 billion figure was raised in July with the Q2 results from about $200 billion; Jassy then attributed the increase mainly to rising memory prices, and added that even at that level of spending, compute capacity would remain short this year and next.
The company-wide numbers look less impressive than AWS. Amazon's third-quarter net sales were $201.9 billion, up 12%. Earnings per share of $1.89 came in below market expectations. Net income fell to $20.7 billion, because the year-earlier period included a $9.5 billion pre-tax gain from Amazon's investment in Anthropic. Overall operating margin was 13.9%, the highest in Amazon's history. Shares fell about 6% in after-hours trading following the release.
Putting it next to Google
Alphabet, which reported in the same week, offers a different reference point: Google Cloud revenue was $30.7 billion in the third quarter, up 103% year over year, and Alphabet's capital expenditure for the quarter was $51.4 billion.
The gap between the two sets of figures is mostly about the base. AWS's quarterly revenue is roughly half again as large as Google Cloud's, and 39% growth translates to about $13 billion in added revenue; Google Cloud's doubling adds about $15.5 billion. On growth rate alone AWS trails by a wide margin, but in absolute new revenue the two are not that far apart.
AWS's talking-up is aimed mainly at investors. Analysts pressed repeatedly on the call about the return on capital spending, the durability of growth and margin expectations, and the share price reaction suggests the explanation has not yet fully persuaded the market.
How long to reach $1 trillion
A rough calculation: starting from the $184 billion annualized run rate and growing 40% a year, revenue would reach about $990 billion after five years, just brushing the $1 trillion mark. Jassy gave a window of five to ten years, which means the five-year version requires AWS to sustain growth above 40% for five straight years, while the ten-year version needs only about 18% a year on average.
Two assumptions behind this math cannot be verified for now. One is how long growth above 40% can last, since Jassy only guided through 2028. The other is how much the “meaningfully more” capital spending in 2027 will actually be; Amazon has not given a figure. The earnings materials also do not break down how the $578 billion backlog is spread across years or how much of it comes from a single large customer.
Sources: Amazon Q3 earnings press release, TechCrunch, CocoLoop, GeekWire, Data Center Dynamics; the earnings call transcript was checked for the AWS backlog and the 2027 and 2028 growth remarks, and Alphabet's Q3 results for Google Cloud revenue and capital spending.