Amazon’s $578 Billion AWS Backlog Is Growing Faster Than Its Revenue
The Amazon Web Services (AWS) backlog reached $578 billion and is rising at triple-digit charges. AWS gross sales, nonetheless, grew 39.3% to $46 billion.
Amazon missed earnings estimates, and shares fell greater than 7% in after-hours buying and selling. Trailing free money stream swung to an outflow of $42.4 billion, versus an influx of $14.8 billion a yr earlier.
Why is the AWS backlog outrunning income?
Backlog rose $82 billion from the second quarter, in response to the earnings name. In distinction, quarterly AWS gross sales added $3.8 billion.
A yr earlier, the backlog stood at $200 billion. It has practically tripled whereas gross sales grew 39.3%. AWS added $4.6 billion in sequential gross sales through the second quarter, so the newest achieve was smaller.
Jefferies analyst Brent Thill says cloud suppliers can not flip backlog into income as shortly as buyers need.
He factors to information heart and provide chain bottlenecks because the trigger.
Amazon CEO Andy Jassy said final quarter that Amazon lacked capability for 2026 demand and anticipated the identical in 2027.
Meanwhile, Jassy stated Amazon installs an AI accelerator about each 14 seconds, with clients absorbing capability nearly as quick.
Can 40% progress justify a much bigger spending invoice?
Amazon now initiatives AWS progress above 40% in 2027 and 2028. AWS progress has accelerated for six straight quarters, from 20% within the third quarter of 2025.
Amazon additionally plans to spend considerably extra subsequent yr than the roughly $220 billion budgeted for 2026. It raised that 2026 determine from $200 billion final quarter, citing greater reminiscence prices.
Cash capital spending reached $75.9 billion within the third quarter alone.
However, AWS working revenue rose to $17.8 billion from $11.4 billion a yr earlier.
Microsoft and Alphabet reported a day earlier, and all three big tech earnings reports centered on AI infrastructure payments.
If supply retains lagging orders, buyers could choose hyperscalers on information facilities switched on reasonably than contracts signed. Faster capability additions would chop the hole and ease strain on the spending plan.
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