Amazon.com Inc. is spending at a rapid rate to expand data center capacity to meet the intense demand for artificial intelligence computing power, fueling the fastest quarterly sales growth for its cloud unit in more than three years. The company reported $151 billion in property and equipment expenses over the 12 months through March 31 — $57.9 billion more than in the same period a year earlier — as it sought to gain an increasing slice of business from leading AI startups Anthropic PBC and OpenAI.
Sales at Amazon Web Services, which accounts for about a fifth of Amazon's revenue and most of its operating profit, were $37.6 billion during the first three months of 2026, up 28% from the prior year, the company said Wednesday in a statement. That's the fastest growth rate since the second quarter of 2022.
Amazon in recent months has invested in OpenAI and Anthropic in deals that committed each lab to spend at least $100 billion on AWS services in the coming years. Those tie-ups have helped assuage investor concerns about slowing AWS growth and Amazon's lack of a hit consumer AI product on par with OpenAI's ChatGPT, Anthropic's Claude or Alphabet Inc.'s Gemini.
“The AI labs are spending an incredible amount of money on compute at this point,” Amazon Chief Executive Andy Jassy said on a conference call with analysts.
The company's backlog of contracts that are expected to materialize as sales in future quarters, primarily from AWS customers, were $364 billion, up 93% from a year earlier, executives said on the call. That figure doesn't include Anthropic's recent commitment.
Jassy made the case for Amazon's position as a builder of infrastructure for companies developing AI services, as well as other businesses experimenting with the technology. Amazon's Trainium line of custom AI chips, many of which are pledged to OpenAI and Anthropic, has “over $225 billion in revenue commitments,” he said. The company last week announced a multibillion-dollar commitment from Meta Platforms Inc. to use its general-purpose chip, called Graviton.
“Nobody has a better set of chips across AI and CPU workloads than AWS with Trainium and Graviton, and we're unusually well positioned for this AI inflection we're in the early stages of experiencing,” he said.
Separately Wednesday, Amazon's rival Microsoft Corp. reported a 39% jump in cloud revenue. Alphabet Inc.'s Google, the No. 3 provider of cloud services, reported $20 billion in sales for that unit, which it called a “meaningful acceleration in growth.”
Amazon has pledged to spend about $200 billion this year — a 56% increase from 2025 — mostly on data centers, including those customized for AI services. In the first quarter, capital expenditures jumped 78% to $43.2 billion, exceeding analysts' estimates.
The spending reduced Amazon's 12-month trailing free cash flow to $1.2 billion at the quarter's end, compared with $25.9 billion a year earlier.
The shares gained about 4% in extended trading after the conference call, reversing earlier losses. The climb was bolstered in part by a Bloomberg report that Anthropic, one of Amazon's biggest AI investments, is weighing a funding round that may more than double its valuation to $900 billion. Amazon stock closed at $263.04 in New York and has climbed 14% this year.
“Amazon Web Services' higher-than-expected revenue growth confirms our view that the cloud provider is well placed to capture rising enterprise AI adoption, especially coding-related workloads,” Bloomberg Intelligence analysts Poonam Goyal and Anurag Rana said in a note after the results were released.
Overall, first-quarter revenue increased 17% to $181.5 billion. Analysts, on average, estimated $177.2 billion, according to data compiled by Bloomberg. Operating income increased to about $23.9 billion in the period ended March 31, compared with $18.4 billion a year earlier.
Amazon's e-commerce operation still generates the biggest share of the Seattle-based company's revenue and Jassy continues to push to speed delivery times to shoppers. Online sales gained 12% to about $64.3 billion in the period, compared with analysts' average estimate of $62.7 billion. Amazon shuttered its Fresh grocery markets and cashierless Go convenience stores during the quarter, its latest retreat from Amazon-branded physical retail stores.
Advertising revenue increased 24% to $17.2 billion, beating the average projection of $16.9 billion. Investors carefully watch the growth rate of the company's ad business because it helps make the e-commerce operation more profitable.
ALSO READ: Samsung's Chip Profit Soars 48-Fold Due To AI Spending Frenzy
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
