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Amazon was one of several tech giants that on Wednesday beat Wall Street\u2019s first-quarter earnings expectations, offering more financial evidence that the AI boom continues to reward companies that supply the picks and shovels. <\/p>\n
Amazon\u2019s cloud business is the latest example. Amazon Web Services, buoyed by its role in fueling the AI boom, saw its net sales increase 28% year-over-year, climbing to $37.6 billion, the company said Wednesday. It was the fastest growth rate for AWS in 15 quarters, Amazon president and CEO Andy Jassy said during the company\u2019s earnings call. <\/p>\n
Jassy attributed AWS\u2019 success to its role in providing compute to the AI industry. <\/p>\n
\u201cIt\u2019s very unusual for business to grow this fast on a base this large. The last time we saw growth at this clip, AWS was roughly half the size,\u201d Jassy said. \u201cWe\u2019ve never seen a technology grow as rapidly as AI. Amazon is already a leader, and companies continue to choose AWS for AI.\u201d<\/p>\n
Jassy compared the business unit\u2019s growth to the aughts. \u201cTo put our growth in perspective, three years after AWS launched, it had a $58 million revenue run rate. [During] the first three years of this AI wave, AWS\u2019s AI revenue run rate is over $15 billion \u2014 nearly 260 times larger.\u201d<\/p>\n
Even as money flows into its cloud business, Amazon is also sinking increasingly large gobs of capital into building out the infrastructure that supports that cloud. Jassy said on Wednesday that capital expenditure growth would continue in the near term. <\/p>\n
\u201cThe faster AWS grows, the more short-term capex we\u2019ll spend,\u201d he said. \u201cAWS has to lay out cash for land, power, buildings, chips, servers, and networking gear, in advance of when we can monetize it.\u201d<\/p>\n
Techcrunch event<\/p>\n
\n\t\t\t\t\t\t\t\t\tSan Francisco, CA<\/span> Jassy positioned these investments as short-term cash burn for a long-term payoff, noting that these capital expenditures fund assets like data centers that last more than 30 years or chips, servers, and networking gear that have a useful life for five to six years.<\/p>\n Jassy did attempt to quell investor fears that the e-commerce giant was spending too much on infrastructure. He also provided more than a hint at how that kind of spending would affect free cash flow. <\/p>\n \u201cIn times of very high growth like now \u2014 where the capex growth meaningfully outpaces the revenue growth \u2014 the early years, free cash flow is challenged,\u201d he said. <\/p>\n Amazon\u2019s first-quarter earnings report reflects the pull on free cash flow. T he company reported that free cash flow decreased to $1.2 billion for the trailing twelve months, driven primarily by a year-over-year increase \u201cWe\u2019ve been through this cycle with the first big AWS growth wave, and like the results. We expect to feel similarly about this next wave with much larger potential downstream revenue and free cash flow,\u201d he added.<\/p>\n The e-commerce giant\u2019s overall sales, meanwhile, rose 17% to $181.5 billion on a year-over-year basis. Sales grew 12% in North America and 19% throughout the rest of the world, the company reported.<\/p>\n<\/div>\n
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of $59.3 billion in purchases of property and equipment \u2014 much of its related to AI. That\u2019s a 95% drop from the $25.9 billion in free cash flow it had in the first quarter of 2025. <\/p>\n