Amazon CEO Andy Jassy believes Amazon Web Services could reach $1 trillion in annual revenue within five to 10 years. Third-quarter growth and a large backlog support the case, but the target requires heavy spending and sustained growth.
Amazon CEO Andy Jassy believes AWS could become a $1 trillion annual revenue business within the next five to 10 years. AWS currently generates approximately $184 billion in annualized revenue, according to the Motley Fool.
The forecast does not rest on artificial intelligence alone. Businesses moving their technology infrastructure to the cloud is a second, longer-running trend behind it.
Most IT spending still sits outside the cloud
According to Jassy, approximately 85% of global IT spending still takes place on companies' own on-premises infrastructure, compared to about 15% in the cloud. He believes those figures will flip over the next 10 to 20 years.
Banks, retailers, manufacturers, and other large enterprises still run important systems on older infrastructure. Moving them would be complicated, but the potential benefits include lower infrastructure costs and greater flexibility.
AWS growth accelerates in the third quarter
AI adds a second growth engine. In the third quarter, AWS revenue increased 39% year over year to $46 billion, its fastest growth rate in nearly five years.
AWS also reported a $578 billion backlog, representing contracted business that has yet to be recognized as revenue. However, backlog isn't guaranteed revenue: Amazon still needs to deliver the capacity, and customers must ultimately use the services.
Third-quarter AWS operating income rose 56% to $17.8 billion, an operating margin of 38.7%.
The target requires heavy spending
Reaching $1 trillion would require growth of roughly 40% annually over five years, or approximately 18% over 10 years. Management recently said it expects AWS to grow by more than 40% in both 2027 and 2028.
Sustaining that pace would be a challenge, the Motley Fool notes. Competition could intensify, cloud customers may become more cost-conscious, and some workloads may be distributed across multiple providers.
Spending is the other constraint. Amazon expects to spend approximately $220 billion on capital expenditures in 2026, with the majority going toward AWS. Management has said it expects to increase capex meaningfully in 2027.
Source: Motley Fool
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