Key Points
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Amazon Web Services is accelerating revenue growth with expectations to maintain a high growth rate in 2027 and 2028.
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Accelerating capital expenditures point to potential for sustained growth.
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Getting to $1 trillion in revenue within the next decade would require significant, but not unreasonable, growth from here.
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Amazon (NASDAQ:AMZN) operates the largest public cloud computing platform in the world. Amazon Web Services (AWS), launched in 2006, completely changed how businesses, big and small, manage their IT infrastructure. Amazon made it easy for developers to access enterprise-level compute with just a click of a button, providing as much processing and storage capacity as needed. That’s become more important than ever in the age of artificial intelligence, where demand can grow extremely quickly.
Indeed, AWS has grown quickly over the last few years, reaching trailing-12-month revenue of $161.4 billion. That would put it ahead of 476 members of the S&P 500 by revenue as a stand-alone business. But Amazon CEO Andy Jassy thinks it could grow much larger. On the company’s third-quarter earnings call, he said AWS could be a trillion-dollar business within five to 10 years. Here’s what it would take for it to get there.
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Accelerating revenue growth
Amazon has seen AWS revenue growth accelerate in each of the last five quarters, reaching 39% year-over-year growth in the third quarter. That acceleration is expected to continue, with Jassy calling for revenue growth exceeding 40% in 2027 and 2028.
The growth reflects a delay in Amazon’s capital expenditures related to its AI build-out. There’s a long lead time for Amazon’s investments in new data centers to turn into revenue. It takes roughly two years after financing new construction for Amazon to sell new AWS services. To that end, it’s worth noting that Amazon’s capital expenditures actually declined in 2023 before climbing roughly 57% in 2024 and another 58% in 2025. Management’s outlook calls for 67% growth in capex this year.
All that is to say that investors can expect steady revenue growth for AWS going forward. In fact, Jassy’s comments suggest revenue could accelerate further as it sees higher returns on its invested capital. “We continue to accelerate our capex payback and have even more conviction than we already had that the investment we’re making in AWS will yield a much larger revenue and free cash flow-generating business than we would have imagined a couple of years ago,” he told analysts on the company’s third-quarter earnings call.
If Amazon continues to plow cash into the AI build-out at a growing pace, AWS revenue could climb for years to come.
What would it take for AWS to become a $1 trillion business?
AWS is on track to generate about $176 billion in revenue this year. In order to reach $1 trillion in revenue within five to 10 years, the business would have to maintain very strong growth. To reach that mark within five years, it would have to grow at an annualized growth rate of about 41.5%. To reach it within 10 years, that CAGR drops to just 19%.
It’s not unreasonable to expect AWS to grow revenue at a rate between those two numbers over the next decade. As mentioned, Jassy already expects revenue growth to accelerate over the next few quarters and sustain a rate above 40% for both 2027 and 2028. Importantly, Amazon should be able to keep increasing its return on invested capital over time as a larger share of capital expenditures goes toward revenue-generating servers instead of data center structures. That means the rate of capital expenditure growth can slow without the same slowdown in revenue growth.
It’s also worth noting that Amazon isn’t just benefiting from the ongoing supply shortage for compute amid the boom in AI development. While that’s certainly helped support its build-out, with its backlog of $578 billion in remaining performance obligations, it stands to benefit from the ongoing shift of businesses from on-premises compute to the cloud. “This is a different model than primarily hosting GPUs or renting short-term data center capacity,” Jassy told analysts. “This is a long-term platform strategy that broadly helps customers invent and evolve their customer experiences, operate stably, and build a reliable partnership they can grow for many years. It also yields very attractive long-term economics for us, regardless of supply scarcity.”
That dynamic should result in sustained revenue growth even as supply constraints ease, providing greater confidence that AWS can reach Jassy’s long-term outlook for $1 trillion in revenue.
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Adam Levy has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
