Amazon.com's first-quarter data center expansion spending surpassed expectations, driving its cloud business to achieve its fastest sales growth in over three years.
The company stated that for the twelve months ended March 31st, its expenditure on property and equipment reached $151 billion, an increase of $57.9 billion compared to the previous year. This investment aims to secure more business from leading artificial intelligence (AI) startups, Anthropic PBC and OpenAI.
For the first three months of 2026, Amazon Web Services (AWS) generated sales of $37.6 billion, a 28% increase year-over-year, marking the fastest growth rate since the second quarter of 2022. AWS contributes approximately one-fifth of Amazon's total revenue and the majority of its operating profit.
Amazon.com's CEO, Andy Jassy, has indicated that the company plans to spend approximately $200 billion this year, a 56% increase from 2025, primarily allocated to data center construction, including facilities specifically tailored for AI services. In the first quarter, spending on property and equipment surged to $44.2 billion, exceeding analysts' forecasts.
This significant capital expenditure reduced Amazon's free cash flow for the trailing twelve months to $1.2 billion by the end of the quarter, down from $25.9 billion a year earlier.
The stock declined approximately 2% in New York after-hours trading, following a closing price of $263.04. Year-to-date, the stock has gained 14%.
In a statement released on Wednesday, the company reported first-quarter revenue of $181.5 billion, a 17% increase compared to the same period last year. This figure surpassed the average analyst estimate of $177.2 billion compiled by Bloomberg. Operating profit for the quarter rose to approximately $23.9 billion, up from $18.4 billion a year ago.
Amazon's e-commerce business remains its largest revenue source, with Jassy continuing initiatives to enhance delivery speeds. First-quarter online sales grew by 12% to approximately $64.3 billion, exceeding the average analyst expectation of $62.7 billion.
Advertising revenue increased by 24% to $17.2 billion, beating the average estimate of $16.9 billion. Investors are closely monitoring the growth of the advertising segment, as it contributes to enhancing the profitability of the e-commerce operations.
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