Andy Jassy Talks AWS AI Revenues

Andy Jassy's 2025 shareholder letter apparently has provided some relief for investors worried about excessive or unneeded capital investment in artificial intelligence-as-a-service spending by Amazon and others. 

“When you identify disproportionate inflections, bet big,” Jassy says, and he clearly bets AI is one of those sorts of bets:

• Three years after AWS launched commercially, it had a $58 million revenue run rate

• Three years into this AI wave, AWS’s AI revenue run rate is over $15 billion in Q1 2026 (nearly 260 times larger than AWS at that same point)—and ascending rapidly

• AWS added 3.9 gigawatts of new power capacity in 2025, expects to double total power capacity by the end of 2027, and is monetizing that capacity as fast as it’s installed

• “we still have capacity constraints that yield unserved demand”

• “two large AWS customers have already asked if they could buy ‘all’ of our Graviton instance capacity in 2026.

And directly addressing investor concerns about high capital investment and payback, Jassy was equally clear. 

“The way AWS’s cash cycle works is that the faster AWS grows, the more short-term capex we’ll spend,” he says. “AWS has to lay out cash for land, power, buildings, chips, servers, and networking gear in advance of when we can monetize it (typically 6-24 months before we start billing customers, depending on the component).”

“The FCF and ROIC for these investments are cumulatively quite attractive a couple years after being in service; however, in times of very high growth (like now), where the capex growth meaningfully outpaces the revenue growth, the early-years FCF is challenged until these initial tranches of capacity are being monetized and revenue growth out-paces capex growth,” he notes.

Also, monetizable demand is not an issue, he argues. “We have customer commitments that make our capex investments predictable.”

“We’re not investing approximately $200 billion in capex in 2026 on a hunch,” Jassy says. “Of the AWS capex we expect to spend in 2026, much of which will be monetized in 2027-2028, we already have customer commitments for a substantial portion of it.”

“You have to be able to withstand criticism as you’re making your way through an inflection,” says Jassy. “We’re ‘comfortable being misunderstood for long periods of time.”

“If you believe you’ve found one of these disproportionate shifts, you want to invest as aggressively as you responsibly can,” he says. “This will create investment spikes that will invite scrutiny, but the game-changers don’t typically accommodate smoother investment horizons.”