Key Takeaways
- Amazon CEO Andy Jassy said Amazon may have two trillion-dollar revenue businesses, AWS and its stores, within five to 10 years.
- If AWS grows 40% a year, its $184 billion run rate reaches about $1 trillion in roughly five years.
- Building toward that growth pushed Amazon’s free cash flow to a record $42.4 billion outflow over the 12 months through September.
- AWS has largely sold its capacity before building it, so the price looks worth paying, and the next word on 2027 spending in early February is the thing to watch.
Amazon (AMZN) just set a… goal? Dream? Fond hope? That no company has ever hit.
“There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years,” CEO Andy Jassy said in Thursday’s third-quarter release. And he named them, just in case there was any uncertainty what he meant: Amazon Web Services (AWS) and Amazon’s stores.
Investors weren’t in the mood. Amazon missed on revenue and earnings and guided the holiday quarter below estimates, and the stock slid.
But here’s the thing: Jassy’s math…kind of looks like it holds up. Unfortunately, the bill for it is already here.
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The trillion-dollar math works
AWS grew 39% to $46 billion in the third quarter. That’s its fastest growth in nearly five years, and Amazon puts it at a $184 billion annual run rate. Jassy also said on the call that AWS can grow “north of 40% in each of 2027 and in 2028.”
Grow $184 billion at 40% a year for five years, and you get about $990 billion. That’s a trillion-dollar business around 2031, early in Jassy’s window.
(That assumes 40% lasts three years longer than he’s guided. At 30%, it takes about six and a half years, which still fits his window.)
The stores have a steadier climb. Online stores, physical stores and third-party seller services brought in nearly $500 billion over the last 12 months. On the Prof G Markets podcast, Scott Galloway said Jassy thinks Amazon can double its retail business by 2032. That takes growth of about 12% a year.
Analysts already expect Amazon as a whole to pass $1 trillion in revenue in 2028:
Those estimates came before Thursday’s report. The soft holiday guide could trim 2026, but AWS growth above 40% in 2027 and 2028 gives analysts more reason to raise the later years than to cut them.
The bill comes first
Growing 40% a year takes a lot of data centers, and Amazon pays for them up front. Free cash flow was already negative in the first half of 2026:
The third quarter made it worse. Over the 12 months through September, Amazon’s free cash flow was a $42.4 billion outflow. That’s the deepest in its history and nearly double the record of roughly $23 billion it set in 2022.
Which, yikes.
As we all know, capex climbed steeply over the last two years:
In the third quarter alone, Amazon spent about $77 billion on property and equipment, more than double the $35 billion it spent a year earlier. On the call, Jassy said Amazon still expects to spend about $220 billion this year, mostly on AWS, and to “spend meaningfully more in 2027.”
Amazon is borrowing to pay for it. Long-term debt reached about $173 billion at the end of September, up from about $66 billion at the end of 2025.
Jassy isn’t worried: “We can fund this plan. I think it will forever change the size of Amazon.”
Sold before it’s built
That’s a lot of cash going out the door. But Amazon is spending to meet demand it already has.
AWS’s backlog reached $578 billion at the end of September, up from about $496 billion three months earlier. And earlier this month Jassy said AWS’s capacity is largely sold out through 2027, with a good chunk of 2028 already spoken for.
The business all that capacity feeds is very profitable. In the third quarter, AWS earned $17.8 billion of Amazon’s $28.1 billion in operating income, at a 38.7% margin.
The risk is paying for it. On Bloomberg’s earnings special, Bloomberg Intelligence’s Anurag Rana said interest rates have risen a lot over the last six months, which makes these build-outs harder to fund. And analysts don’t expect Amazon’s free cash flow to turn positive for a full year until 2028.
My take: the price is worth paying. Amazon is building for contracts it has already signed, at margins near 39%, and that kind of spending comes back as cash once the build slows.
Still, that depends on how much bigger the build gets. Amazon’s next word on 2027 spending should come with its fourth-quarter results in early February. If spending keeps outrunning AWS’s growth, Jassy’s first trillion gets a lot more expensive.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
