Amazon ups AI investments as cloud sector chases windfall

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AWS again doubled down on its investment plans to support a massive infrastructure buildout that matches soaring enterprise demand for AI services. 

Enterprise spending on cloud infrastructure services reached $143 billion in the second quarter of 2026, up from $100 billion in the previous quarter, according to Synergy Research Group data. The year-over-year growth rate notched the 11th consecutive growth quarter jumping 43% — the highest growth rate in the last eight years, the market analyst group found. 

Businesses are working to deploy agentic AI systems, which require infrastructure that can be operated effectively. Hyperscalers will focus on resource efficiency, infrastructure scale and the strength of AI agent offerings to differentiate, a recent Omdia report found. 

“GenAI-specific cloud services are growing at 165% year over year, but equally importantly, AI technology is enabling enhanced functionality and increased growth across a much broader range of cloud services,” said John Dinsdale, chief analyst at Synergy Research Group in the report.

AWS held onto its leadership position with 28% of the market share, with Microsoft Azure and Google Cloud following at 20% and 15%, respectively, Synergy Research Group found. 

With AWS as a boon, Amazon reported $200.6 billion in revenue, up 20% year over year, executives said during the company’s Q2 earnings call Thursday. AWS revenue reached $169 billion in annualized revenue run rate, CEO Andy Jassy said during the call.  

Customers continued to increase cloud migrations and scale up their use of AWS core services this quarter, CFO Brian Olsavsky said on the call. Customers seeking out AI deployments are accelerating their transition to the cloud, and the company is seeing a link between its AI spend and its core growth, he said. 

“We expect this relationship to strengthen over time as more AI workloads move into full-scale production and drive additional demand for our core services,” Olsavsky said. 

Amazon’s AI investments

The company is planning to increase its capital expenditure spend, estimating $220 billion instead of the $200 billion projected earlier in the year, Jassy said. The majority of spending is going to AI investments and AWS. 

Google also increased its CapEx spending this quarter, but Microsoft held the line in its investments plan, citing growth in Azure, its first-party AI applications and services. 

Amid the effort to expand compute capacity, the company now has a “clear line of sight to strong financial returns,” in its data centers and servers, Jassy said. It plans on pouring the adjusted capital into data center infrastructure, as AI demand calls for more computing power. Amazon predicts it will begin seeing returns in about two years, when servers can be placed. 

In a few years, Amazon expects revenue growth to outpace the incremental CapEx growth, the CEO said.  

“We’ve done this before in the first era of cloud computing, just over a longer time horizon, where demand built more gradually than it has in AI,” Jassy said during the call. 

The margins and returns in AI the company is seeing tracks with what it saw in its non-AI compute services at the same point of evolution, or slightly ahead, Jassy said.  

Although the CEO said he believes AWS and Amazon can have a successful business without its own frontier model, the company is pursuing one to gain additional control over its own cost and the cost of its consumer applications. 

“There is not going to be one model to rule the world,” Jassy said. “You already see that right now. It’s not just Anthropic or it’s not just OpenAI. You see increasingly more and more companies being interested in the open models as well.”

Even at the increased CapEx spending rate, the company projects it will still not have enough capacity to meet all the demand it has in 2026, Jassy said, a dynamic that he expects will continue into next year. 

“The accelerated cloud growth rate over the last three years, and in particular over the last four quarters, has been quite remarkable,” Dinsdale said. “AI technology has lit a fire under the cloud market and is now driving unprecedented growth.”