Amazon surpassed Wall Street’s first-quarter earnings projections, showcasing the ongoing benefits of the AI boom for tech suppliers. Amazon Web Services (AWS), playing a key role in AI’s growth, reported a 28% year-over-year net sales increase, reaching $37.6 billion. This marks AWS’s fastest growth in 15 quarters, noted by Amazon president and CEO Andy Jassy during an earnings call. Jassy credited AWS’s rapid expansion to its critical role in AI computing, highlighting the rarity of such fast growth on a large scale. He compared it to earlier stages, noting AWS’s AI revenue run rate now exceeds $15 billion, nearly 260 times larger than its post-launch $58 million rate.
Despite the influx into its cloud business, Amazon continues to heavily invest in the required infrastructure, with projected capital expenditure growth. Jassy explained that as AWS grows, short-term capital investment increases for infrastructure elements like land and servers, in anticipation of eventual monetization. Such investments, Jassy noted, are long-term assets with extended useful lifespans.
Jassy addressed investor concerns regarding high infrastructure costs and their impact on free cash flow, acknowledging the current challenges due to capex growth vastly outpacing revenue growth. This is reflected in Amazon’s first-quarter report, which shows a decline in free cash flow to $1.2 billion, primarily because of significant property and equipment purchases related to AI, a sharp drop from $25.9 billion in 2025.
Nevertheless, Jassy remains optimistic, comparing the situation to AWS’s initial growth cycle and expecting significant future returns. Amazon’s overall first-quarter sales grew 17% to $181.5 billion, with 12% growth in North America and 19% globally.