Assessing AWS Growth, the Anthropic Loop & (of course) Capex: Keys to AWS segment of AMZN Earnings

By Sanji Alwis and Jack Hermann Published on July 29, 2026 PDF

3 Key Issues We’re Watching Thursday

What we would act on

Three keys: (1) revisions to the ~$200bn 2026 capex plan and any 2027 framing, relative to sequential FCF trend; (2) the composition of the AWS acceleration, specifically frontier-lab capacity versus broad enterprise; and (3) whether Trainium and the Anthropic commitment show up as disclosed revenue or stay intercompany and related-party.

Unlike META, Amazon has the enterprise contract base and growing cost advantage on inference to mitigate the capex expansion. AWS sells the full managed stack rather than spare capacity, and its backlog sits with paying enterprises, not AI labs alone. There is an element of capital circularity- Amazon has financed its own largest customer Anthropic – but its core is rock solid and diversified. We remain optimistic that AWS’s investments in optimizing for inference and AI scale will keep them as the preferred cloud provider choice for both startups and for its large partner network – serving the middle market up to Fortune 2000.

1. Capex, capex over revenue, and free cash flow

Q1 cash capex was $43.2bn, the largest quarter in company history, against an approximately $200bn 2026 plan set at Q4 and roughly $125bn spent in 2025. FCF is forecasted to turn negative for 2026, last seen in 2021 & 2022 when AMZN also went on its Covid capex spending spree. This investment has historically worked out for AMZN in the long run because they see how many of these businesses are in more commoditized, physical infrastructure markets where scale wins vs sustainable differentiated.

The majority of Amazon’s capital expenditures are now directed toward AWS, with analysts estimating roughly 70–85% is invested in cloud and AI infrastructure. This investment is critical to expanding capacity for rapidly growing AI and enterprise cloud demand, positioning AWS to support long-term revenue growth and maintain its competitive leadership. Alphabet raised capex guidance twice this year and reported negative free cash flow last week. We will be closely watching company guidance.

Figure: AMZN Capex & FCF

Source: Optimal Advisory analysis, company filings, Bloomberg

2. AWS growth, and what is actually inside the acceleration

Q1 AWS revenue grew 28% to $37.6bn, the fastest in fifteen quarters, on roughly a $150bn annualized run rate at a 37.7% segment margin. Consensus for Q2 sits near $40.5bn, with the street at 31-33%. Backlog reached $364bn, up from $244bn at Q4, and excludes the Anthropic commitment of over $100bn announced in April. Alphabet’s comparable figure is now $514bn. Anthropic has named AWS its primary cloud and training provider, and OpenAI has signed a long-term partnership as well. RPO treatment of both is unclear, but commitments of this length signal durable demand.

The split between AI Lab revenue and the rest of AWS’s customer base is key here. For AI services against core migration, how much of the step-up is Anthropic and OpenAI capacity coming online rather than demand broadening. Google Cloud’s 82% comes off roughly a $100bn base while AWS compounds on $150bn, so AWS does not need to match the growth rate, only to show the gap closing.

AWS serves a broad customer base but has a particularly strong presence among startups, digital-native companies, SaaS providers, and developers that require scalable cloud infrastructure. This positions AWS well to benefit from the rapid growth of AI startups and businesses, whose compute-intensive workloads and need for flexible infrastructure are likely to drive sustained demand for AWS’s cloud and AI services.

Figure: AWS Growth & RPO treatment

Source: Optimal Advisory analysis, company filings, Bloomberg

3. Trainium is an increasingly valuable asset; the AI Lab loop is the short-term question

Custom silicon crossed a $20bn annualized run rate in Q1 with triple-digit growth, and Trainium revenue commitments exceed $225bn. Trainium2 is sold out and Trainium3 nearly fully subscribed. Amazon has developed a cost advantage on inference by optimizing its mix of AWS Trainium vs NVIDIA.

The Anthropic and the more recent OpenAI investments are additional massive investments representative of our ongoing circular capital flow coverage. Amazon committed up to $25bn in April to Anthropic, taking cumulative investment to roughly $33bn, against Anthropic committing over $100bn to AWS across ten years and up to 5GW of capacity.Q1 net income of $30.3bn included a $16.8bn non-cash gain on the stake. The AI Lab partnerships secure the anchor tenants for the Trainium roadmap but future cash flow from lower inference costs is the true sign of return.

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