AWS’s AI business has passed a $25bn annual revenue run rate, while Amazon is spending heavily to expand its cloud and AI infrastructure. Yahoo Finance’s 7 October article also points to a sharp tension: the reported growth comes alongside a $7.6bn trailing-year free-cash-flow outflow, largely tied to higher equipment spending.
AWS AI Watch analysis
What happened
The article says AWS’s AI business grew at triple-digit rates year on year in the second quarter of 2026. It reports that hundreds of thousands of customers now use Bedrock, with second-quarter spending exceeding the total from all earlier quarters combined. Usage of Amazon’s Kiro coding agent tripled from the previous quarter.
The article also highlights September additions to AWS’s AI services, including OpenAI’s GPT-6 Astra and Moonshot AI’s Kimi K3 on Bedrock, the general availability of the Amazon Quick desktop app, and the launch of Amazon Connect Talent. Amazon is also investing $1bn in AWS Forward Deployed Engineering, a team intended to help customers build and deploy agentic AI systems.
AWS sales rose 37% year on year to $42.2bn in the second quarter, while operating income increased to $16.6bn. The article says Amazon’s trailing 12-month free cash flow fell to a $7.6bn outflow, mainly because property and equipment purchases rose by $66.1bn, largely for AI. It also flags memory-chip supply volatility as a risk. These figures and characterisations are reported in the Yahoo Finance article, which originally appeared on Zacks Investment Research.
Why it matters
This is a useful snapshot of the AI cloud business beyond model launches: customers are spending, AWS is adding products, and Amazon is building a team to help deploy them. The reported figures suggest AI is becoming a significant part of the cloud growth story, although the article does not break out the underlying projects or explain how the AI revenue run rate is calculated.
The investment bill is part of the story too. Strong demand and rising AWS operating income sit beside heavy infrastructure spending and negative free cash flow. That makes the question less “is there interest?” and more whether demand and returns can keep pace with the cost of serving it.
Our read
There is real commercial momentum here, not just another shelf of model names. But a revenue run rate is not the same as a profit figure, and a fast-growing business can still be a costly one. For cloud customers, the practical takeaway is a broader AWS AI menu; for investors and operators, the test is whether usage turns into durable returns without infrastructure spending running too far ahead.
What to watch
- Whether Amazon gives a clearer breakdown of AI revenue, margins and infrastructure costs.
- Whether Bedrock usage and the newer services continue to grow beyond the figures reported for Q2.
- How memory-chip supply affects AWS capacity and Amazon’s spending plans.
Discussion spark: Should AWS’s reported AI growth be judged mainly by customer spending and revenue, or by whether it can turn that demand into sustained cash generation?
Sources and evidence
- Is Amazon Stock Poised to Rally on AI Services Revenue Expansion? – Yahoo Finance UK (7 October 2026, 13:40 UTC)
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