AWS beats Q4 estimates at $35.6B revenue despite parent's $200B capex spook
Amazon Web Services reported $35.58B in Q4 revenue (up 24% year-over-year) and $12.47B in operating profit, beating analyst estimates of $34.93B and $11.91B respectively. Operating margin widened slightly to 35% from 34.6% in Q3.
The numbers validate AWS as Amazon's profit engine, but the parent company's earnings call overshadowed the cloud unit's performance. Amazon forecast $200B in 2026 capital expenditure, a 50%+ increase from 2025's spending and well above the $148.86B analyst consensus. Stock dropped 10% post-earnings despite the AWS beat.
The AI infrastructure context
AWS CEO Matt Garman said the company added nearly 4 gigawatts of computing capacity in 2025, racing to meet AI workload demand. The quarter saw AWS launch Nova Forge (custom AI model training at $100K annual access) and secure a $38B spending commitment from OpenAI.
The growth rate tells the real story. AWS accelerated from 18% (Q2) to 20.2% (Q3) to 24% (Q4), outpacing Google Cloud's 48% and Azure's 39% in absolute dollar terms but trailing in percentage growth. Analysts expect AWS to maintain 21-22% growth into 2026.
What this means in practice
For enterprise tech leaders evaluating cloud providers:
Infrastructure capacity: AWS added more raw compute (4GW) than competitors in 2025, relevant if you're planning large-scale AI training workloads or batch inference jobs requiring spot instance availability.
Margin stability: The 35% operating margin held despite massive infrastructure spending. This matters for long-term service pricing, though Amazon's $200B capex could pressure future rates.
AI positioning: Deutsche Bank called Amazon an "AI laggard" among major tech companies, a view the stock drop supports despite revenue beats. If your AI strategy depends on cutting-edge foundational models, AWS's partnerships (Anthropic, OpenAI) may matter more than its first-party offerings.
The fine print: AWS still represents only 17% of Amazon's total revenue but generates most of its profit. The parent company's heavy spending and recent 16K job cuts suggest margin pressure ahead, even as the cloud unit performs.