Amazon Web Services (AWS) posted $30.9 billion in revenue for Q2 2025, bringing its annualized run rate to a staggering $123 billion. That’s industry-leading size, yet growth at +17.5 percent year-over-year trails behind Google Cloud’s 32 percent and Microsoft’s 26 percent pace.
CEO Andy Jassy attributed the slower growth to the sheer scale AWS now operates at—greater size naturally leads to slower percentage gains. But he emphasized that AWS remains far ahead: its nearest competitor is only about 65 percent of its size. That scale gives AWS leverage when pursuing generative AI ambitions.
To support this ambition, Amazon ramped up capital expenditure to $31.4 billion in Q2, indicating that capex will likely hit $118 billion by year-end. More than 40 percent of that spending is tied directly to AWS, including major commitments like $13 billion for Australian data centers and $20 billion in Pennsylvania. Yet Jassy acknowledged that AWS still faces infrastructure bottlenecks—power limitations, chip supply, and server yield issues remain real constraints. He expects relief to build over the coming quarters.
Despite slower growth, AWS operating income rose to $10.2 billion. Margins dipped from 39.5 percent to 32.9 percent, largely due to increased depreciation from heavy infrastructure build-out and foreign exchange impacts. CFO Brian Olsavsky maintained the company anticipates margins will continue to fluctuate based on investment timing.
On the AI front, Amazon rebuffed concerns that it’s falling behind competitors. Strategic partnerships like the one with Anthropic, which trains models using AWS’s Trainium2 chips, underscore its bet on proprietary infrastructure. Jassy noted these chips deliver 30–40 percent better price-performance for inference workloads—a crucial advantage as AI scales.
Crucially, Jassy also reiterated his long-standing thesis: roughly 85–90 percent of global IT spend still sits on-premise today, but he expects the balance to tip toward cloud in the coming decade. As enterprises shift workloads into the cloud, AWS ownership over applications, data, and infrastructure puts it in a dominant position.
The company recently landed major deals with firms like Airbnb, Nasdaq, London Stock Exchange, and Nissan. Shares dropped over 8% following the earnings report, but AWS is still pushing hard. They’re scaling up infrastructure, expanding their customer base, and going all-in on generative AI leadership.
