• Amazon’s Q1 capex bill topped $24bn
• Much of that went towards infrastructure expansion at its hyperscaler unit Amazon Web Services (AWS) and development of its own AI processors
• The investments are paying off, as AWS’s sales grew by 17% to more than $29bn in the first three months of 2025

Amazon Web Services (AWS) generated revenues of $29.27bn, up 17% year on year, and an operating profit of $11.55bn, up 23%, for the first quarter of this year, giving it an annualised revenue run rate of about $117bn. Its growth and prospects are propped up by massive ongoing investments from parent company Amazon, which spent more than $24bn in capital expenditure (capex) during the first three months of the year, much of it going towards AWS’s infrastructure expansion.   

Supported by such investments, AWS continues to be the clear leader in the cloud infrastructure services sector, with a 29% market share in the first three months of this year – see AI-fuelled cloud services sector soars in Q1 to almost $94bn. 

The hyperscaler’s parent company, Amazon, which has just entered the low-earth orbit (LEO) satellite sector with its recent initial Project Kuiper launch, reported total group sales of $155.67bn, up by 9%, and an operating profit of $18.4bn, up by 20%. 

“We’re pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences,” stated Amazon CEO Andy Jassy in this earnings announcement. “From Alexa+ (our next generation of Alexa that’s meaningfully smarter, more capable, and takes actions for customers), to another delivery speed record for our Prime members, to our new Trainium2 chips and Bedrock model expansion that make it easier for AWS customers to train models and run inference more flexibly and cost effectively, to our first Project Kuiper satellites successfully launching into low-earth orbit in our quest to provide broadband access to hundreds of millions of households in rural areas without it today, we’re continuing to find meaningful ways to make customers’ lives easier and better every day.” 

Commenting on AWS during the company’s earnings conference call, Jassy noted “it’s useful to remember that more than 85% of the global IT spend is still on premises, so not in the cloud yet. It seems pretty straightforward to me that this equation will flip in the next 10 to 20 years. Before this generation of AI, we thought AWS had the chance to ultimately be a multihundred-billion dollar revenue run rate business. We now think it could be even larger. 

“If you believe your mission is to make customers’ lives easier and better every day, and you believe that every customer experience will be reinvented with AI, you’re going to invest very aggressively in AI, and that’s what we’re doing. You can see that in the thousand-plus AI applications we’re building across Amazon…. and you can see that in the building blocks AWS is constructing for external and internal builders to build their own AI solutions. We’re not dabbling here. We’re very intentionally giving builders the broadest possible capabilities at every level of the AI stack cost, effectively to use AI expansively across their businesses. At the bottom layer for those building models, our new custom AI chip, Trainium 2, is starting to land capacity in larger quantities with significant appeal and demand,” he said. 

The CEO also noted that AWS is also in the process of reducing its reliance on chipsets from Nvidia to run its AI workloads (though he didn’t mention Nvidia by name). 

“While we offer customers the ability to do AI in multiple chip providers and will for as long as I can foresee, customers doing AI at any significant scale realise that it can get expensive quickly. So the 30 to 40% better price performance that Trainium 2 offers versus other GPU-based instances is compelling. For AI to be as successful as we believe it can be, the price of inference needs to come down significantly. We consider this part of our mission and responsibility to help make it so.”

Jassy added: “Infrastructure modernisation is much less sexy to talk about than AI, but it’s fundamental to any company’s technology and invention capabilities, developer productivity, speed and cost structure. And for companies to realise the full potential of AI, they’re going to need their infrastructure and data in the cloud.”

And Amazon is pumping big bucks into its infrastructure. On the conference call, the company’s CFO, Brian Olesofsky, noted that the first quarter’s total company capital expenditure came to $24.3bn. “The majority of this spend is to support the growing need for technology infrastructure. This primarily relates to AWS as we invest to support demand for our AI services and increasingly in custom silicon like Tranium as well as tech infrastructure to support our North America and international segments.”

- Ray Le Maistre, Editorial Director, TelecomTV