Amazon raised its 2026 capital expenditure target to $220 billion from $200 billion Thursday, pointing the bulk of the increase at AI infrastructure as enterprise cloud spending surged to $143 billion in the second quarter, a 43 percent year-over-year jump that marks the fastest pace in eight years. The move signals that the hyperscalers' infrastructure arms race is accelerating faster than capacity can be built, with Amazon warning it will still fall short of demand through next year.
The numbers behind the hike
Enterprise spending on cloud infrastructure services reached $143 billion in the second quarter, up from $100 billion in the prior quarter, according to Synergy Research Group. The year-over-year growth rate notched its eleventh consecutive quarter of growth at 43 percent. GenAI-specific cloud services grew 165 percent year over year, though Synergy chief analyst John Dinsdale noted AI is also lifting growth across a broader range of cloud services. AWS held a 28 percent market share, ahead of Microsoft Azure at 20 percent and Google Cloud at 15 percent.
Amazon's earnings context
Amazon reported $200.6 billion in quarterly revenue, up 20 percent year over year, with AWS hitting a $169 billion annualized revenue run rate. CFO Brian Olsavsky said customers seeking AI deployments are accelerating their transition to the cloud, creating a link between AI spend and core services growth that the company expects to strengthen as more workloads move into full-scale production.
The return timeline
Jassy said the company has a clear line of sight to strong financial returns in its data centers and servers, with returns expected in about two years when servers can be placed. In a few years, revenue growth should outpace incremental CapEx growth. The margins and returns in AI track with non-AI compute services at the same evolutionary point, or slightly ahead. Even at the higher spend rate, Amazon projects insufficient capacity to meet all 2026 demand, a dynamic Jassy expects to continue into next year.
The model strategy
Jassy argued AWS can succeed without its own frontier model but is pursuing one to gain control over costs for its consumer applications. "There is not going to be one model to rule the world," he said, citing Anthropic, OpenAI, and growing interest in open models. Google also raised CapEx this quarter while Microsoft held its investment plan steady, citing Azure growth and first-party AI services.