Amazon's cloud is nearly sold out through 2027. Can its AI spending keep up with demand?
Amazon Web Services (AWS) has sold out most of its cloud computing capacity for 2027, with a substantial portion of 2028 capacity already committed, as surging artificial intelligence demand outpaces its infrastructure expansion, chief executive Andy Jassy said.
Speaking on a video podcast with Andreessen Horowitz co-founder Ben Horowitz and general partner Erik Torenberg, Jassy said Amazon was struggling to meet demand from AI laboratories and enterprise customers, despite plans to spend about $220 billion on capital expenditure in 2026.
“2027 is largely sold out. We always leave a certain amount for on demand and our inference [service] Bedrock, or EC2, but largely sold out all the big chunks. A good chunk of 2028 is sold out,” Jassy said.
He added that Amazon could justify investing more to meet demand, with much of its 2026 cloud capacity already booked.
The comments highlight the growing pressure on cloud providers to supply the computing power needed to develop and run AI systems. AWS offers cloud infrastructure through services including Elastic Compute Cloud (EC2), which provides virtual servers, and Amazon Bedrock, which gives customers access to AI models.
Jassy described AI demand as a “barbell”. AI laboratories are consuming computing resources on an unprecedented scale, while businesses are using AI for specific tasks such as customer service and fraud detection. The middle of the market, where everyday business software has yet to adopt AI widely, remains largely untapped.
He expects this segment could eventually become the largest source of demand as businesses expand their use of AI.
The cost of inference, the computing required when an AI model responds to a prompt or performs a task, remains a barrier to wider adoption.
“It's still an order of magnitude too expensive in my opinion for it to be used as pervasively as possible,” Jassy said, suggesting costs need to fall roughly tenfold for AI to become more widely used.
Amazon is developing its own chips to improve performance and reduce computing costs. Jassy compared the effort with the company's earlier decision to develop Graviton processors when it sought better performance per dollar from server chips.
“We saw that same movie in the AI space,” he said.
Amazon is positioning its Trainium chips as a lower-cost option for AI computing. Jassy said they offer 30% to 40% better price-performance than comparable processors.
“Our chips business is a big piece of that,” he said.
Amazon has disclosed more than $225 billion in future Trainium revenue commitments, including agreements involving Anthropic and OpenAI. Jassy also credited Amazon's investment in Anthropic with supporting its chip efforts.
He described the acquisition of chip design firm Annapurna Labs more than a decade ago as potentially the best deal in Amazon's history. The company helped develop both Trainium and Graviton.
Amazon is scheduled to report its third-quarter results on October 29, when investors will look for further details on cloud growth and infrastructure spending.
(With Reuters Inputs)
For about a decade, Livemint—News Desk has been a credible source for authentic and timely news, and well-researched analysis on national news, business, personal finance, corporates, politics and geopolitics. We bring the latest updates on all the listed companies on BSE and NSE, startups, mutual funds, Union ministries, geopolitics, and untapped human interest stories from around the world, helping our readers to stay informed on the latest developments around the globe. Our Coverage Areas 1. Companies: Comprehensive news and analysis on listed and unlisted companies, corporate announcements, corporate chatter, C-suite, business trends, hiring alerts, layoffs, work-life balance, world's top billionaires and richest and more. 2. Personal finance: Insights into mutual funds, small savings schemes like - PPF, SSY, post office savings scheme, stock to watch, personal loans, credit cards, top bank FDs, real estate, income tax and more. 3. Politics: Comprehensive coverage of general elections, state elections and bypolls, Lok Sabha, Vidhan Sabha, Parliament, PMO, PIB, finance ministry, home ministry, among other union ministries and government departments. 4. National News: From metro cities like Delhi, Mumbai, and e to untapped stories from rural India, we cover human interest, health, education, crime and courts, and law and order, among other areas of public interest. 5. Economy: In-depth analysis of India's macro and micro-economic indicators like- GDP, inflation, forex, fiscal deficit, current account deficit, interest rate cycle, economic recovery, RBI circulars, indirect taxes, GST, Insolvency and Bankruptcy imports, exports and everything that impacts Indian economy. 6. Geopolitics: Well-rounded and deeply researched coverage on US News, Oval Office European Union, Ukraine Russia War, middle-east crisis, royal families and global leaders like - Donald Trump, Vladimir Putin, Kim Jong Un, Xi Jinping and premiers of other leading economies in the world. Meet the Team 1. Gulam Jeelani, Political Affairs Editor 2. Sugam Singhal, Senior Assistant Editor 3. Chanchal, Assistant Editor 4. Sanchari Ghosh, Chief Content Producer 5. Pratik Prashant Mukane, Chief Content Producer 6. Sayantani Biswas, Chief Content Producer 7. Ravi Hari, Deputy Chief Content Producer 8. Garvit Bhirani, Deputy Chief Content Producer 9. Akriti Anand, Senior Content Producer 10. Jocelyn Felix Fernandes, Senior Content Producer 11. Swastika Das Sharma, Content Producer 12. Mausam Jha, Content Producer 13. Riya R Alex, Trainee Content Producer
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More
✕
Wait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.