Amazon raises 2026 capex to $220 billion but says AWS capacity will still fall short

Amazon raised its 2026 capital-spending forecast by 10% to about $220 billion, but CEO Andy Jassy said the additional investment still will not give the company enough computing capacity to satisfy all customer demand this year.

Speaking on Amazon’s second-quarter investor call, Jassy said higher memory-chip costs were a major reason for the increased spending outlook. Even at the revised level, Amazon will remain capacity-constrained through 2026, and Jassy said he expects the same condition in 2027, according to Reuters’ July 30 report.

Demand is extending beyond the current build cycle

The constraint is centered on Amazon Web Services infrastructure rather than the company’s retail fulfillment network. Jassy said the lion’s share of AWS compute capacity planned for 2027 has already been reserved by customers, with a meaningful amount of 2028 capacity also committed.

Amazon’s second-quarter release supplied additional demand signals. AWS revenue increased 37% year over year to $42.2 billion, its fastest growth in 18 quarters, while AWS operating income reached $16.6 billion. Contract backlog ended the quarter at $496 billion, up from $364 billion three months earlier.

The company also said its AWS artificial-intelligence business and proprietary-chip business each exceeded a $25 billion annualized revenue run rate and were growing at triple-digit percentages. Amazon identified multi-year, multi-gigawatt Trainium commitments from Anthropic and OpenAI, alongside adoption by customers including Uber and Pinterest.

Why the spending arrives before the revenue

Jassy said Amazon begins spending on data centers roughly two years before those facilities open. That timing creates an extended period in which cash is committed to land, power, buildings and computing equipment before the infrastructure can serve workloads and generate revenue.

The buildout is already visible in cash generation. Amazon reported trailing-12-month free cash outflow of $7.6 billion, compared with an $18.2 billion inflow a year earlier, primarily because purchases of property and equipment increased by $66.1 billion. The company said that increase mainly reflected artificial-intelligence investment.

Read-through for US technology suppliers

Amazon’s capacity shortfall indicates that its infrastructure procurement cycle remains driven by contracted and anticipated workloads rather than unused supply. The most direct read-through is continued demand for memory, accelerators, networking equipment, power systems and data-center construction, although Amazon did not provide a supplier-level allocation of the revised budget.

The interpretation would change if AWS backlog growth slowed, reserved capacity were released, customer commitments were reduced, or Amazon revised the $220 billion spending plan. Until then, the company’s disclosed bookings and capacity reservations support a multi-year infrastructure expansion extending beyond 2026.