Overview
Amazon said it intends to spend approximately $200 billion in capital expenditures in 2026, with the bulk of that outlay directed toward building AI infrastructure. The commitment was disclosed in the companys annual shareholder letter and accompanied by performance and capacity details across AWS, Amazons custom chip business, retail operations and satellite services.
AWS AI momentum and capacity
Jassy reported that AWSs AI revenue run rate surpassed $15 billion in the first quarter of 2026. He characterized that pace of growth as nearly 260 times the rate AWS experienced at a comparable stage of its development. At the same time, Amazon added 3.9 gigawatts of new power capacity in 2025 and said it expects to double total power capacity by the end of 2027.
Despite strong top-line AI traction, AWS faces capacity constraints that the company said are producing unserved demand. Jassy noted a $142 billion revenue run rate for AWS in the fourth quarter of 2025, a 24% year-over-year increase, while pointing to limits on the ability to meet all customer needs.
Financials and cash flow impact
For the full year 2025, Amazon reported revenue of $717 billion, up 12% from $638 billion in 2024. Operating income rose 17% to $80 billion from $69 billion. Free cash flow, however, fell to $11 billion from $38 billion year over year. The company attributed the decline in free cash flow to a $50.7 billion increase in purchases of property and equipment tied to AI investments.
Custom chips and potential cost savings
Amazons suite of custom AI chips - Graviton, Trainium and Nitro - has reached an annual revenue run rate greater than $20 billion, and the unit is growing at triple-digit percentages year over year. Jassy said that, at scale, Trainium is expected to save tens of billions in capex annually and to deliver several hundred basis points of operating margin advantage.
Retail, logistics and delivery initiatives
In retail operations, Amazon introduced Amazon Now, an ultra-fast delivery service promising thousands of items within 20 minutes. In India, the offering is registering 25% month-over-month order growth, supported by more than 360 micro-fulfillment centers in that market. Amazons grocery business exceeded $150 billion in gross sales in 2025, making it the second-largest grocer in the United States by that measure.
The company said its Prime Air drone delivery program aims to serve communities encompassing 30 million customers by year-end and expects to deliver half a billion packages by the end of the decade. Amazon has established over 85 Same-Day Fulfillment Centers across the United States and reported delivering more than 500 million same-day units in 2026 thus far.
Satellite network and customer commitments
Amazon Leo, the companys low Earth orbit satellite network, has more than 200 satellites in space. The business has secured revenue commitments from several customers, including Delta Air Lines, which has committed to begin service on 500 planes in 2028. Other named customers include JetBlue, AT&T, Vodafone and NASA.
Jassy said that a substantial portion of the AWS capex planned for 2026 already has customer commitments attached. He highlighted an over $100 billion commitment from OpenAI as a significant component of that backing.
Key implications
- Amazon is allocating very large-scale capex to support AI and related infrastructure expansion.
- Strong AI and custom-chip revenue run rates coexist with capacity limits that are creating unserved demand at AWS.
- Retail and logistics expansions - including ultra-fast delivery and drone plans - are advancing alongside cloud investments.
Risks and uncertainties
- Capacity constraints at AWS are producing unserved demand, which may limit near-term revenue capture in cloud AI services.
- Heavy capital spending related to AI infrastructure materially reduced free cash flow year over year, indicating near-term pressure on cash generation.
- A substantial portion of the planned AWS capex is supported by customer commitments, including a noted over $100 billion commitment from OpenAI - if such commitments changed, the financing or utilization of that capex could be affected.
Bottom line
Amazons 2026 capex plan centers on scaling AI infrastructure and related capabilities across cloud, custom silicon, retail logistics and satellite services. The company reports robust revenue run rates in AI and custom chips but also acknowledges capacity limits and a significant impact on free cash flow driven by the aggressive investment program.