AWS' contract backlog climbed to nearly $500 billion, and the unit's operating margin rose to 39% in the second quarter of 2026. AWS revenue growth accelerated to 37% year over year, and the segment now accounts for 60% of Amazon's operating profit.
Amazon's cloud unit's backlog climbed to nearly $500 billion. Its operating margin reached 39% in the second quarter of 2026.
AWS margins outpace the rest of Amazon
For most of 2025, AWS' growth rate sat somewhere in the low 20% range. Then, in the second quarter of 2026, growth accelerated to 37% year over year, while the unit's operating margin improved alongside it. That combination matters, because AWS' margin now runs far ahead of Amazon's commerce segments — the cloud unit alone accounted for 60% of Amazon's operating profits in the quarter.
Heavy spending feeds a growing backlog
Amazon is on course to spend around $220 billion this year on capital expenditures, with nearly all of that going to data centers. The company builds out computing capacity, then leases it to clients, and demand keeps outrunning supply. As a result, Amazon's backlog is increasing at a triple-digit percentage rate year over year even as the company keeps building.
Jassy points to a shortage through 2027
CEO Andy Jassy told investors that Amazon would not be able to build computing capacity fast enough to fully meet demand in 2026, and that the shortage will likely persist through 2027. As a result, the company is already seeing 2028 demand pop up, and Motley Fool analyst Keithen Drury argues the current AI buildout phase is not expected to conclude until at least 2030.
Amazon trades at less than 25 times next year's expected earnings, and Drury argues that valuation, paired with AWS' accelerating margins, leaves room for the stock to keep climbing.
Source: The Motley Fool
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