Amazon $AMZN AMZN is benefiting from surging demand for both core cloud workloads and generative AI services, with Amazon Web Services’ (“AWS”) order backlog climbing 40% year over year to $244 billion in the fourth quarter of 2025, signaling durable multi-year revenue visibility.
Amazon’s cloud computing arm, AWS, has emerged as the clearest beneficiary of enterprise AI adoption. AWS posted fourth-quarter 2025 revenues of $35.6 billion, up 24% year over year — the segment's fastest growth in 13 quarters — pushing AWS to an annualized run rate of approximately $142 billion.
A key pillar of Amazon's AI strategy is its proprietary silicon push. The company's custom chips — Trainium and Graviton — crossed a combined annual revenue run rate of more than $10 billion, expanding at triple-digit percentages year over year. Trainium2, with 1.4 million chips deployed, powers the majority of inference workloads on Amazon Bedrock, a managed AI service now used by over 100,000 companies. Trainium3 is already delivering production workloads with nearly all 2026 supply committed, while Trainium4 is targeted for 2027. In March 2026, AWS also deepened its relationship with OpenAI, expanding an existing agreement by $100 billion over eight years, with AWS serving as the exclusive third-party cloud distribution provider for OpenAI Frontier.
Yet the path ahead carries meaningful financial risk. To sustain this AI infrastructure buildout, Amazon guided for approximately $200 billion in capital expenditures in 2026 — a sharp step-up from $131.8 billion in 2025 — with the majority allocated to AWS. That level of spending will weigh on near-term free cash flow and compress margins as depreciation rises. For first-quarter 2026,