AWS Growth Hits 37% as Cloud Revenue Passes $169 Billion Run Rate — and the Spending Isn't Slowing Down
Amazon Web Services closed its fastest growth quarter in four and a half years on Thursday, with cloud revenue jumping 37% year over year to $42.2 billion. The result pushed AWS to a $169 billion annualized revenue run rate and topped analyst forecasts of $40.54 billion, according to StreetAccount.
The numbers landed as part of a blowout quarter for parent Amazon, which posted net sales of $200.6 billion — the first time total revenue crossed the $200 billion mark in a single three-month stretch, up 20% from the same period last year. Operating income climbed 43% to $27.5 billion, and shares jumped more than 9% in after-hours trading.
The cloud war is now a three-way sprint
AWS's 37% growth rate is its strongest since 2021, and it marks a clear acceleration from the 28% the division recorded in the first quarter. But Amazon isn't running this race alone. Microsoft said Wednesday that revenue from Azure and other cloud services grew 43% in its fiscal fourth quarter, passing $100 billion in trailing twelve-month revenue for the first time. Alphabet's Google Cloud grew even faster, surging roughly 82% to nearly $25 billion in the June quarter, after posting 63% growth in the first three months of the year.
Here's how the three hyperscalers stack up on trailing twelve-month cloud revenue, based on the latest quarterly disclosures:
| Provider | TTM cloud revenue | Latest quarterly growth |
|---|---|---|
| AWS | $148.4 billion | 37% |
| Azure and other cloud services | $100+ billion | 43% |
| Google Cloud | ~$78 billion | 82% |
The acceleration across all three is no accident. Each company has spent the past year racing to open data centers packed with AI chips, and customers are signing up for capacity faster than the providers can build it. Andy Jassy, Amazon's president and CEO, told investors on the earnings call that the company will still not have enough capacity to meet all the demand it sees in 2026 — and he expects the same squeeze to persist into 2027. "In fact, the demand we already have for 2028 is striking," he said.
The AI and chips businesses are now real revenue lines
AWS's artificial intelligence business and its custom silicon unit each crossed a $25 billion annual revenue run rate in the quarter, more than doubling from last year, Jassy said in the earnings release.
The chip business has quietly become one of AWS's strongest selling points. Amazon released its Graviton5 processor into general availability, promising up to 25% better compute performance than Graviton4 and 30-40% better price-performance than comparable instances. Graviton chips are now used by 98% of the top 1,000 EC2 customers, and revenue commitments tied to the line nearly tripled quarter over quarter. On the training side, Trainium momentum continues: Anthropic and OpenAI have both signed multi-year, multi-gigawatt commitments, and an expanding roster of startups — NEURA Robotics, Odyssey, TwelveLabs, Poolside, and others — plus larger customers like Uber and Pinterest are adopting the chips.
The model marketplace is growing too. Amazon Bedrock added more than 10 fully managed foundation models this quarter, including OpenAI's GPT-5.6, Anthropic's Claude Opus 5, Google DeepMind's Gemma 4, and SpaceXAI's Grok 4.3. Jassy said hundreds of thousands of customers now use Bedrock, with more customers added in the last six months than in the first two years after launch. Customers also spent more on the service in Q2 than in all prior quarters combined, according to the company.
Capex hits $220 billion as memory prices bite
Amazon now expects capital expenditures of $220 billion for the full year, up from the $200 billion forecast it gave in February and April. Jassy pointed to rising memory prices as a reason for the increase, and he made clear the spending spree has no near-term end in sight.
The second quarter alone saw capex of $54.2 billion, up 68% from $32.1 billion a year earlier. That level of investment has flipped free cash flow negative: trailing twelve-month free cash flow swung to an outflow of $7.6 billion from an inflow of $18.2 billion in the prior-year period, driven by a $66.1 billion year-over-year increase in property and equipment purchases.
AWS's backlog — contracted work that hasn't come online yet — reached $496 billion during the quarter, a figure Jassy cited as evidence that the demand is real and already committed. Wall Street had anticipated a capex hike after Alphabet raised its own spending plans to as high as $205 billion for the year.
AWS's profit engine keeps humming
The cloud division remains Amazon's most profitable business by a wide margin. AWS generated $16.62 billion in operating income for the quarter, up from $10.2 billion a year earlier, at a 36.8% operating margin. Google Cloud's margin came in at 35.6%, and AWS now contributes nearly 61% of Amazon's total operating profit.
Analysts took note of the growth re-acceleration. Evercore's Mark Mahaney and Greg Melich wrote in a note after Alphabet's results that while it's "hard to see anyone matching GOOGL's pace of sequential dollar revenue growth," the shift in share could be a modest investor concern — and they recommend buying Amazon stock.
Classified workloads move to the cloud
Alongside the earnings, AWS announced general availability of AWS Secret Cloud for Industry, a managed service that lets cleared U.S. defense contractors run contractor-owned classified workloads directly on AWS infrastructure. Northrop Grumman is the first defense contractor to deploy classified workloads on the platform, in the AWS Secret-East Region — work that would otherwise have required months of hardware procurement to stand up on-premises, the company said.
The service holds a Provisional Authorization at Impact Level 6 from the Defense Information Systems Agency, and AWS is backing the push with an accelerator initiative worth up to $20 million in credits for defense industrial base companies. The classified-cloud expansion taps into the same federal spending wave that has fueled AWS's government business for years, and it gives the division another growth vector beyond commercial AI workloads.
Guidance: a softer headline, a stronger story
For the third quarter, Amazon guided to net sales between $197 billion and $202 billion, representing 9-12% growth. The headline looks like a slowdown, but the company says it's mostly an artifact of timing: this year's Prime Day moved to June, creating a tough comparison against last year's July event. Excluding the impact of both years' Prime Day, third-quarter growth would be nearly 400 basis points higher, Amazon said.
Operating income for the quarter is expected between $22.5 billion and $26.5 billion, versus $17.4 billion in the same quarter last year.
What this means for the cloud market
The takeaway from this earnings cycle is that the AI-driven expansion of cloud infrastructure is not a story about one vendor. AWS, Azure, and Google Cloud all grew faster in the June quarter than they did in March, and all three are pouring more money into data centers than analysts expected. For Cloud & Edge Computing readers, the more telling number may be the $496 billion AWS backlog — contracted demand that will take years to fulfill, and that will keep the industry's construction crews, chip suppliers, and power utilities busy well beyond this earnings season.
Jassy's comment about 2028 demand being "striking" suggests the buildout is still in its early innings. If anything, the risk for customers is the opposite of what it was a decade ago: instead of too much capacity, there may not be enough to go around.
Amazon's broader business is in good shape — advertising grew 26% to $19.8 billion, Prime delivery speeds hit new records, and the company's investment in Anthropic added $53.4 billion in pre-tax other income to the quarter's net income of $62.6 billion. But the cloud is the engine, and the engine is running hotter than it has in years.
For more on how the hyperscalers are funding this buildout and what it means for AI infrastructure, see our look at how Google Cloud and Microsoft Azure are spending big on AI data centers. You can also dig into the full Amazon Q2 2026 earnings release and CNBC's breakdown of the AWS results for the raw numbers behind this story.