Amazon Web Services (AWS) delivered a powerhouse performance in the fourth quarter, beating Wall Street expectations and signaling that Amazon’s massive AI infrastructure push is already paying off. At the same time, the company announced plans to spend $200 billion on capital expenditures in 2026, mostly on AI-related projects, showing just how serious it is about staying ahead in the cloud arms race.
AWS revenue for Q4 hit $35.58 billion, surpassing analyst estimates of $34.93 billion by $650 million, representing 24% year-over-year growth. Operating income reached $12.47 billion, giving AWS a 35% operating margin higher than expected and accounting for the majority of Amazon’s total profits.
“Just for perspective, that’s twice what we had in 2022, when AWS was an $80 billion annual run rate business,” said Amazon CEO Andy Jassy during the earnings call. “We expect to double it again by the end of 2027.” The growth is driven in large part by AWS’s massive expansion in computing capacity nearly 4 gigawatts added in 2025 alone which Jassy said will double again by 2027.
The announcement that Amazon plans $200 billion in 2026 capex, roughly $51 billion above analyst expectations, underlines how the company is betting big on AI. Jassy explained, “Some of it is for our core workloads, which are non-AI, because they’re growing faster than anticipated. But most is in AI – we have a lot of growth and a lot of demand.”
The timing is strategic. AWS dominates the cloud market, but competitors are gaining ground. Google Cloud grew 48%, its fastest since 2021, while Microsoft Azure posted 39% growth. Both companies are investing heavily in AI services, creating a high-stakes infrastructure race. Amazon’s massive spending plan shows it is determined not to fall behind.
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AWS’s Q4 also highlighted its role as a backbone for the AI ecosystem. The unit rolled out Nova Forge, giving customers access to Amazon’s generative AI models for training and customization. It also secured a $38 billion infrastructure commitment from OpenAI, positioning AWS as a critical partner for one of AI’s biggest players.
While AWS’s 24% growth trails Google Cloud and Azure, its sheer scale and profit margins give Amazon a unique advantage. Operating income of $12.47 billion funds Amazon’s wider business, including e-commerce, devices, and content. The 35% margin offers flexibility competitors can’t match, allowing AWS to continue aggressive expansion without risking overall corporate health.
Analysts note that the AI infrastructure arms race is now about more than cloud storage, it’s about compute power for model builders, from startups to large enterprises. Companies like Anthropic, OpenAI, and other AI innovators need massive computing resources, and providers compete to lock in multi-billion-dollar commitments. AWS’s OpenAI deal signals it is still winning key partnerships.
Amazon is also modernizing its offerings. AWS is working on more media-rich AI services and dynamic AI agents, moving beyond simple text outputs. This expansion shows the company is focused on providing infrastructure not just for traditional workloads, but for the AI-driven future.
The scale of AWS’s growth is staggering. For context, Microsoft added roughly 1 gigawatt of capacity in 2025—Amazon added four times that amount. Doubling capacity again by 2027 would reinforce AWS as the platform of choice for enterprises and AI developers worldwide.
For investors, the Q4 beat provides reassurance. Amazon’s stock had been under pressure, but the cloud unit’s performance and massive capital commitment demonstrate that Amazon is not just participating in AI, it’s trying to lead it. Execution remains critical; the $200 billion spend is a bet that AI adoption will continue to accelerate. If the market meets expectations, Amazon’s aggressive investment could pay off for the decade ahead.
In short, AWS is Amazon’s strategic engine for AI dominance, driving revenue, profits, and long-term market positioning. With computing capacity surging, partnerships secured, and AI investments scaling rapidly, Amazon is staking its claim as the cloud provider that others will have to chase.
