AWS Growth Hit 39% as Amazon Said It Will Sell Trainium Chips Outside Its Cloud From Late 2027
Amazon Web Services revenue rose 39% to $46.0 billion in the third quarter, its fastest growth since late 2021, and Andy Jassy projected growth above 40% in both 2027 and 2028. On the call he said Amazon will offer its Trainium AI chips outside AWS late in 2027, CNBC reported. AI spending left Amazon's trailing free cash flow at minus $42.4 billion.
Amazon's quarter answers the question Alphabet's raised a day earlier: the cloud business is growing fast enough to carry the AI build-out, but the cash is still going out faster than it comes in. AWS revenue rose 39% to $46.0 billion, and chief executive Andy Jassy used the call to say Amazon will start selling its Trainium AI chips outside its own cloud late in 2027, CNBC reported. That puts Amazon on the same path as Google, which now books sales of its TPU chips as hardware.
AWS#
AWS's growth rate was its highest since the fourth quarter of 2021, according to CNBC, and revenue beat the $45.29 billion StreetAccount consensus. Amazon put the business at a $184 billion annual revenue run rate. AWS operating income was $17.8 billion, up from $11.4 billion a year earlier; CNBC put it at $17.77 billion against a $16.97 billion estimate, and said AWS is now almost 23% of Amazon's revenue, a record.
Jassy projected AWS revenue growth "of over 40% both in 2027 and in 2028" in the release. On the call he said AWS could become "a trillion-dollar revenue business in the next five to 10 years." Last week he said AWS capacity was sold out for 2026 and largely sold out for 2027.
The release lists new AWS agreements with Meta, NVIDIA, OpenAI, Salesforce and Oracle, among others. On Trainium, Jassy told analysts: "With Trainium demand so strong, customers continue encouraging us to make it available outside of AWS. We intend to do so late in 2027." Alphabet's third-quarter release said TPU system sales were a meaningful contributor to Google Cloud's growth.
The cash#
Amazon's net sales rose 12% to $201.9 billion, and operating income was $28.1 billion, a 13.9% margin that Amazon called its highest ever. Net income fell to $20.7 billion from $21.2 billion, because the year-earlier quarter included $9.5 billion of pre-tax gains on Amazon's Anthropic investment.
Free cash flow for the trailing twelve months was an outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier. Amazon said the swing was driven by a $94.8 billion year-over-year increase in purchases of property and equipment, which "primarily reflects investments in artificial intelligence." It still expects 2026 cash capital expenditures of about $220 billion.
For the fourth quarter, Amazon guided to net sales of $240 billion to $247 billion and operating income of $28.5 billion to $33.5 billion, against $25.0 billion a year earlier.
Limits#
- Jassy's growth projections and the Trainium plan are forward-looking statements by the company; the Trainium quote is from the earnings call as reported by CNBC, and we did not review a full call transcript.
- Consensus figures are StreetAccount's, as reported by CNBC.
- Amazon does not break out AI revenue or name Trainium's prospective outside buyers.