INSIGHT: Amazon plans to spend $220 billion in 2026 and still expects to leave AI demand unmet. On 23rd October, Amazon President / CEO Andy Jassy said AWS’s large capacity blocks were largely booked for 2027, with a good chunk of 2028 already taken.
AWS is retaining capacity for on-demand customers. Jassy also said he would not squeeze existing customers out to serve AI labs.
Anthropic and OpenAI have secured multiyear computing commitments. Amazon is both their supplier and an investor.
The build requires cash before new capacity starts earning revenue. In the year to 30 June, Amazon generated $161.4 billion in operating cash but spent $169 billion on property and equipment, net of sales and incentives. Free cash flow was negative $7.6 billion.
At 30th June, Amazon held $123 billion in cash and marketable securities. Its $132.1 billion of unsecured senior notes had an average 14.2 years remaining. Bondholders lend to Amazon as a company. Long maturities reduce refinancing…