Amazon told investors on its third-quarter 2026 earnings call that AWS can become a trillion-dollar revenue business within the next five to 10 years. Management also pointed to grocery-driven retail spending and plans to sell its custom chips externally. Capital expenditures keep rising to meet AI infrastructure demand.
On its Oct. 29, 2026 earnings call, Amazon projected that AWS can become a trillion-dollar revenue business within the next five to 10 years. Capital expenditures are increasing to meet AI infrastructure demand, while retail operating margins expand.
AWS growth accelerates
AWS accelerated its revenue growth to 39.3% year over year in the third quarter. The segment reached an annualized revenue run rate of $184 billion, as cloud migrations and enterprise demand for AI compute capacity drive multiyear commitments.
CEO Andy Jassy said Amazon believes AWS can grow north of 40% in each of 2027 and in 2028. Capital expenditures are reaching approximately $220 billion in 2026 for cloud infrastructure.
Grocery pulls shoppers into other categories
Same-day delivery of perishable groceries acts as a primary catalyst for higher customer engagement across retail categories. Customers who order fresh groceries buy more nongrocery merchandise, including items from Amazon's Everyday Essentials category.
Jassy said shoppers who buy perishables with same-day delivery purchase nearly seven times more Everyday Essential units than those who don't.
Custom chips head to outside buyers
Amazon's Graviton chips handle general compute and its Trainium chips handle AI workloads, lowering infrastructure costs for cloud clients. Strong external demand is prompting management to offer the chips beyond AWS.
Jassy said customers keep asking for Trainium outside AWS. According to Andy Jassy: "We intend to do so late in 2027." The plan to sell the chips externally targets 2027.
Long-term shareholder returns depend on converting these investments into sustained free cash flow across cloud and retail operations. Management is watching hardware cost efficiencies and logistics network density to maintain operating leverage.
Source: The Motley Fool
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