“As we have been sharing, the faster AWS grows, the more short-term CapEx we will spend.”

In context

“ue and always will be true. Different companies will offer different benefits for customers, and the uniquely strong price performance that Trainium offers is compelling to our external and internal customers. For perspective, at scale, we expect Trainium will save us tens of billions of dollars of CapEx each year and provide several hundred basis points of operating margin advantage versus relying on other chips for inference. Finally, we continue to be confident in the long-term CapEx investments we are making. Of the AWS CapEx we intend to spend in 2026, much of which will be installed in future years, we have high confidence this will be monetized well, as we already have customer commitments for a substantial portion of it and that it will yield compelling operating margins and ROIC. As we have been sharing, the faster AWS grows, the more short-term CapEx we will spend. AWS is to lay out cash for land, power, buildings, chips, servers, and networking gear in advance of when we can monetize it, typically six to 24 months before we start billing customers depending on the component. However, these CapEx investments fund assets with many-year useful lives—30-plus years for data centers, five to six years for chips, servers, and networking gear. The free cash flow and ROIC for these investments are cumulatively quite attractive a couple of years after being in service. However, in times of very high growth like now, where the CapEx growth meaningfully outpaces the revenue growth, the early years’ free cash flow is challenged until these initial tranches of capacity are being monetized and revenue growth outpaces CapEx growth. We have been through this cycle”