Amazon Web Services (AWS) has once again demonstrated its market dominance, reporting a robust fourth-quarter revenue of $35.58 billion. This figure not only surpassed analysts’ expectations of $34.93 billion but also represented a significant 24% year-over-year increase for Amazon’s cloud computing arm. This performance underscores AWS’s continued strength in the cloud infrastructure sector, a market it pioneered nearly two decades ago.
The cloud unit’s operating income reached $12.47 billion, also exceeding the consensus estimate of $11.91 billion. This contributed substantially to Amazon’s overall profitability, with AWS operating margins widening slightly to 35% from 34.6% in the preceding quarter. This healthy margin indicates efficient operations and strong pricing power within the competitive cloud landscape.
While AWS maintains its leadership position, the cloud market is witnessing intense competition, particularly from Google and Microsoft. Both rivals are experiencing rapid growth, with many industry observers attributing a significant portion of this momentum to their advancements in artificial intelligence (AI) services.
Alphabet’s Google Cloud segment, which encompasses both its infrastructure platform and Workspace productivity tools, reported an impressive 48% revenue jump in the fourth quarter, marking its fastest growth since 2021. Similarly, Microsoft announced a 39% expansion in revenue from its Azure cloud services. This surge in AI-driven demand is reshaping the cloud market, compelling all major players to invest heavily in AI infrastructure.
In response to this evolving landscape, AWS has been actively enhancing its AI offerings. During the fourth quarter, the company launched Nova Forge, a service designed to enable advanced customization of generative AI models during the training phase. Furthermore, AWS secured a substantial $38 billion spending commitment from OpenAI, signaling a deepening partnership and a shared vision for AI development.
AWS CEO Matt Garman highlighted the company’s aggressive expansion of computing capacity, stating that AWS added nearly 4 gigawatts in 2025 alone. This represents a doubling of the capacity deployed in 2022 when the company was generating $80 billion in annual revenue. Amazon CEO Andy Jassy indicated that the company expects to double this capacity again by the end of 2027, reflecting a massive investment in future growth.
Looking ahead, Amazon anticipates capital expenditures of $200 billion in 2026, with the majority earmarked for AWS. This figure significantly exceeds the Visible Alpha consensus of $148.86 billion. Jassy clarified that while some of this investment will support the accelerated growth of traditional workloads, the primary driver is the immense demand for AI-related services. This strategic allocation of capital underscores AWS’s commitment to maintaining its competitive edge in the burgeoning AI era.
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