Amazon CEO Andy Jassy said AWS has sold out its large 2026 capacity allocations and still expects to leave demand unmet as the company plans about $220 billion in capital spending this year.
On an a16z podcast released Friday, Oct. 23, Jassy said 2027 was “largely sold out” and that “a good chunk” of 2028 capacity had also sold out. He said Amazon keeps some capacity available for on-demand services such as Bedrock and Elastic Compute Cloud (EC2), but acknowledged that AWS cannot meet all requests.
Amazon reported AWS sales of $42.2 billion in the second quarter ended June 30, up 36.7% from a year earlier. The cloud business had an annualized revenue run rate of $169 billion. Amazon also said its AI and chips businesses each exceeded a $25 billion annual revenue run rate.
Amazon’s filing reported $96.3 billion in cash capital expenditures during the first half of 2026, including $53.1 billion in the second quarter. Most technology infrastructure spending supports AWS, the filing said, while other spending expands fulfillment capacity. Amazon expected both categories to increase during 2026. Jassy’s roughly $220 billion estimate applies to the company’s overall capital plan, not an AI-only or AWS-only budget.
Amazon reported trailing 12-month free cash flow of negative $7.6 billion through June 30, compared with positive $18.2 billion a year earlier. The company attributed the decline mainly to increased property and equipment purchases tied to AI investment. As of June 30, Amazon reported roughly $496 billion in unrecognized performance obligations under contracts exceeding one year, mostly related to AWS. Amazon separately reported a 6.4-year weighted-average remaining life for its long-term contracts. The obligations do not map capacity by year; Amazon said revenue timing depends on customer usage and its delivery of contractual services.
Jassy said Amazon needs to invest in data centers about two years before servers can be installed and begin generating revenue. Servers and networking equipment can be ordered closer to deployment, often a few months ahead, and generally have useful lives of five to six years. He also described memory-allocation choices between high-bandwidth memory for AI accelerators and DRAM for core cloud workloads, and said Amazon would not redirect capacity away from existing AWS customers for AI buyers.
AWS Chief Financial Officer John Felton told Axios he was comfortable with the spending, citing a nearly $500 billion backlog and demand from large AI labs, enterprises and smaller businesses. Amazon’s filing confirms the total value of the obligations but does not provide a customer breakdown. Amazon is scheduled to discuss third-quarter results on Thursday, Oct. 29, at 5 p.m. ET.
