Amazon reports higher spending to fuel cloud unit sales

Published Thu, Apr 30, 2026 · 07:27 AM

[WASHINGTON] Amazon.com spent more than anticipated to expand data centre capacity in the quarter, fuelling the fastest sales growth for its cloud unit in more than three years.

The company said that it spent US$151 billion on property and equipment over the 12 months to Mar 31 – US$57.9 billion more than in the year-ago period – as it sought to gain an increasing slice of business from leading artificial intelligence startups Anthropic PBC and OpenAI.

Sales by Amazon Web Services (AWS), which accounts for about a fifth of Amazon’s revenue and most of its operating profit, were US$37.6 billion during the first three months of 2026, up 28 per cent from the prior year. 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 the labs to spend more than US$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’s Gemini.

Amazon CEO Andy Jassy has said that the company aims to spend about US$200 billion this year, a 56 per cent increase from 2025, mostly on data centres, including those customised for AI services. In the first quarter, property and equipment expenses jumped to US$44.2 billion, exceeded analysts’ estimates.

The spending reduced Amazon’s 12-month trailing free cash flow to US$1.2 billion at the quarter’s end, compared with US$25.9 billion a year earlier.

The shares declined about 2 per cent in extended trading after closing at US$263.04 in New York. The stock has gained 14 per cent this year.

Overall, first-quarter revenue increased 17 per cent to US$181.5 billion, the Seattle-based company said on Wednesday. Analysts, on average, estimated US$177.2 billion, according to data compiled by Bloomberg. Operating income increased to about US$23.9 billion in the period ended Mar 31, compared with US$18.4 billion a year earlier.

Amazon’s e-commerce operation still generates the biggest share of the company’s revenue and Jassy continues to push to speed delivery times to shoppers. Online sales gained 12 per cent to about US$64.3 billion in the period, compared with analysts’ average estimate of US$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 per cent to US$17.2 billion, beating the average projection of US$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. BLOOMBERG