Amazon's $1 Trillion Revenue Math: The AWS AI Infrastructure Play

The math for Amazon to reach $1 trillion in annual revenue is straightforward, but the execution is a scalability challenge. The company is on a plausible path, but it requires accelerating its current growth rate, with AWS AI infrastructure expansion serving as the critical lever.

Amazon's projected revenue for this year is about $720 billion, putting it slightly ahead of Walmart's $700 billion. To hit $1 trillion by 2028, the company needs a compound annual growth rate of roughly 14% over the next three years. That's a meaningful acceleration from its recent pace. For context, Amazon's revenue grew by 11.48% year-over-year for the twelve months ending September 2025, and its overall growth rate is currently about 14% . The target is to modestly exceed that.

This growth trajectory is ambitious but not out of reach, given the vast Total Addressable Market (TAM) for its core services. The company's current revenue of roughly $691 billion represents a small fraction of the potential global commerce and cloud services markets. The real engine for hitting the $1 trillion mark will be its cloud division, AWS. While e-commerce, which accounts for nearly four out of every five dollars of Amazon's revenue, grows at about 10%, AWS is expanding at a much faster 22% annual growth rate. Artificial intelligence is poised to supercharge that cloud growth, making it the primary driver for the required acceleration.

Scalability Analysis: The AWS AI Infrastructure Engine

Among Amazon's diverse businesses, the AWS segment stands out as the most scalable engine for future growth. While e-commerce and advertising show solid expansion, AWS operates on a different plane. Its growth rate of 19% year-over-year in the fourth quarter of 2024 is already more than double the company's overall pace, and analysts project it could accelerate to over 30% in 2026. This isn't just faster growth; it's a higher-margin, capital-light model that can scale with less friction than physical retail. The scalability thesis hinges on one critical factor: physical infrastructure capacity.

AWS has made a massive, deliberate bet on this scalability. The company now operates with double the power capacity it had in 2022, and CEO Andrew Jassy has stated the plan is to double again by 2027. This isn't a vague ambition. The company is executing a quarterly build-out, with a commitment to add at least another 1 gigawatt of power in a single quarter. This physical expansion of data centers, power grids, and custom chips is the fundamental enabler for capturing surging demand for AI infrastructure. It directly targets the monetization of AI services and agents, providing the underlying hardware to process the workloads.

The financial commitment underscores the strategic priority. Amazon is investing $125 billion in AI infrastructure, a massive capital expenditure that will depress near-term earnings through depreciation. But for a growth investor, this is a classic "build now, profit later" play. The market is currently pricing in modest earnings growth, but the setup is for a significant earnings inflection in 2027-2028 as this new capacity comes online and is monetized. The model is clear: each gigawatt of added power is expected to generate an estimated $3 billion in revenue. This creates a powerful, scalable revenue engine that can drive Amazon toward its $1 trillion target.

The bottom line is that AWS's scalability is a function of its physical footprint. The company is not just selling cloud services; it is building the essential infrastructure for the AI era. This expansion provides a durable moat and a predictable path to capturing a larger share of the soaring AI market, making it the primary lever for the required acceleration in Amazon's growth trajectory.

Financial Model and Profitability Trajectory

The path from top-line growth to sustainable profits is the central financial question for Amazon's $1 trillion ambition. The company's current model shows a clear trade-off: massive investments are depressing near-term earnings, but they are designed to create a powerful long-term earnings inflection.

Operating results for the third quarter illustrate this tension. Amazon's overall operating income was flat year-over-year at $17.4 billion. However, that figure includes two significant special charges: a $2.5 billion legal settlement and $1.8 billion in severance costs. Excluding these items, underlying operating income would have been a robust $21.7 billion. This gap reveals the core dynamic: Amazon's core businesses are generating strong underlying profitability, but strategic spending is pressuring the bottom line.

The capital intensity of the AI bet is the primary source of this near-term dilution. The company is investing $125 billion in AI infrastructure, a massive capital expenditure that will be depreciated over time. This depreciation is a key reason why Wall Street anticipates only modest EPS growth of 11% for 2026, despite robust revenue expansion. The market is pricing in this earnings drag from the CapEx.

Yet the long-term trajectory is the focus for a growth investor. The goal is to expand AWS margins as it scales its AI infrastructure. The financial model hinges on the revenue generated per unit of capacity. Each gigawatt of added power is expected to generate an estimated $3 billion in revenue. With AWS planning to add at least another 1 gigawatt in a single quarter, this creates a scalable revenue engine. The custom silicon edge, with chips like Trainium2 and the upcoming Trainium3, is designed to capture more of that revenue by offering a lower-cost alternative to competitors, which should support higher margins over time.

The advertising segment also provides a high-margin growth counterbalance. It generated $17.6 billion in Q3 revenue, up 22% year-over-year, and is on track to exceed $60 billion annually. This business scales efficiently and contributes to overall profitability without the same level of physical capital intensity as AWS.

The bottom line is a calculated trade-off. Amazon is sacrificing near-term earnings for future dominance. The $125 billion AI investment is a bet that the resulting capacity will drive AWS growth to over 30% in 2026 and beyond, leading to a significant earnings inflection in 2027-2028. For now, the financial model shows strong underlying profitability being temporarily masked by strategic spending. The sustainability of this path depends entirely on the successful monetization of that massive new infrastructure.

Catalysts, Risks, and What to Watch

The path to Amazon's $1 trillion revenue target is now set by a few critical catalysts and a clear set of risks. For investors, the near-term focus is on whether the company can accelerate AWS growth to its projected over 30% rate in 2026 and monetize the new AI infrastructure at scale. The long-term thesis depends on navigating intensifying competition and the capital demands of its AI bet.

The primary catalyst is AWS's continued AI-driven growth acceleration. CEO Andy Jassy has stated that AWS growth rates have returned to 2022 levels, a period of peak expansion. The company is seeing strong demand for AI and core infrastructure, with AI agents becoming more valuable. The massive physical build-out-adding at least another 1 gigawatt of power in a single quarter-must translate into revenue. Each gigawatt is expected to generate an estimated $3 billion in revenue, creating a scalable engine. Another key catalyst is the expansion of advertising into new formats, which is already thriving. The segment is on track to exceed $60 billion annually and grew 22% last quarter, showing its ability to scale efficiently alongside AWS.

Major risks loom on multiple fronts. Competition in cloud and advertising is intensifying, with rivals like Microsoft and Alphabet also vying for AI market share. Regulatory scrutiny over Amazon's market dominance could increase, adding friction. Most pressing for a growth investor is the capital intensity of the AI investments. The company is investing $125 billion in AI infrastructure, a commitment that depresses near-term earnings through depreciation. This creates a risk that free cash flow could be pressured if revenue growth from the new capacity lags expectations.

What to watch are the quarterly metrics that signal scalability. First, monitor the AWS growth rate to see if it consistently hits the projected over 30% for 2026. Second, track AWS segment margins as the new capacity comes online; margin expansion is the key to the promised earnings inflection. Finally, watch the advertising revenue trajectory to gauge its high-margin growth contribution. The stock's recent muted performance, despite strong fundamentals, suggests the market is waiting for these catalysts to materialize. The setup is for a significant earnings boost in 2027-2028, but the path requires executing flawlessly on both growth and capital discipline.