Amazon raises 2026 capex to $220B as AWS growth accelerates to 37% YoY

Amazon raised its 2026 capital expenditure guidance from $200 billion to $220 billion, citing surging AI demand and elevated memory costs. AWS revenue grew 37% year-over-year to $42.2 billion in Q2 2026 — its fastest growth in 18 quarters — reaching a $169 billion annualized run rate. The backlog swelled to $496 billion. Amazon's custom silicon lines Graviton and Trainium each crossed $25 billion annualized run rates, and customer spending on Amazon Bedrock in Q2 surpassed all previous quarters combined since its 2023 launch.

On strategy, CEO Andy Jassy argued AWS could become a $1 trillion annual revenue business as cloud migration and AI adoption mutually reinforce each other, and made the case that Amazon can win the AI race without owning the best model by making Bedrock the biggest inference engine. AWS's AI business is now generating revenue at more than $25 billion a year, more than doubling year-over-year.

The mechanism behind the run-rate: AWS added 10+ managed foundation models to Bedrock during the quarter, including OpenAI's GPT-5.6, Anthropic's Claude Opus 5, Google DeepMind's Gemma 4 and xAI's Grok 4.3, positioning itself as a model-neutral inference layer. This mirrors Microsoft's simultaneous multi-model Azure pivot — both hyperscalers are converging on the same 'own the inference, not the model' thesis.

Reuters framed the report as soothing investor fears over rising AI spending, as AWS growth reassured the market that capex is translating into revenue. What to watch: whether $220B capex sustains margins, how Trainium adoption fares against NVIDIA dependence, and whether the $496B backlog converts on schedule as memory costs stay elevated.