Amazon: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 29, 2026, Amazon (NASDAQ:AMZN) projected that Amazon Web Services (AWS), its cloud computing arm, can become a trillion-dollar revenue business within the next five to 10 years. Capital expenditures, or capex, are increasing to meet massive artificial intelligence (AI) infrastructure demand while retail operating margins expand.

Three key takeaways from management's call explain how these investments shape the long-term outlook for shareholders.

1. Cloud Growth Could Propel AWS to a Trillion-Dollar Business

AWS accelerated its revenue growth to 39.3% year over year in the third quarter. The segment reached an annualized revenue run rate of $184 billion as expanding cloud migrations and enterprise demand for AI compute capacity drive multiyear commitments.

With our continued pace of innovation, new core and AI functionality, enterprises wanting to run their core and AI workloads in AWS, and the amount of capacity that we're adding each year, we believe that AWS can grow north of 40% in each of 2027 and in 2028 and be a trillion-dollar revenue business in the next five to 10 years.
-- Andy Jassy, Chief Executive Officer

2. Grocery Expansion Drives Broader Retail Spending

Delivering perishable groceries through same-day fulfillment centers acts as a primary catalyst for higher customer engagement across retail categories. Customers who order fresh groceries buy significantly more nongrocery merchandise and high-frequency, household and consumable products that people use in their daily lives from Amazon's Everyday Essentials category.

Customers who shop perishables with same-day delivery buy nearly seven times more Everyday Essential units than those who don't.
-- Andy Jassy, Chief Executive Officer

3. External Hardware Sales Open a New Revenue Stream

Amazon's proprietary microchips, such as Graviton for general compute and Trainium for AI workloads, lower infrastructure costs for cloud clients. Surging external demand is prompting management to commercialize its custom chips beyond its proprietary cloud network.

Short-term capacity for prior generation Trainium instances sell at a premium compared to the first half of the year. With Trainium demand so strong, customers continue encouraging us to make it available outside of AWS. We intend to do so late in 2027.
-- Andy Jassy, Chief Executive Officer

Looking Ahead

Capital expenditures are reaching approximately $220 billion in 2026 for cloud infrastructure. Management is watching hardware cost efficiencies and logistics network density to maintain operating leverage.

What we're building at Amazon is unlike anything that's ever been seen before. There has never been a business with a trillion dollars of annual revenue. Amazon is on a path to have two of them in AWS and stores.
-- Andy Jassy, Chief Executive Officer

Long-term shareholder returns depend on converting infrastructure investments into sustained free cash flow across cloud and retail operations.

We continue to accelerate our capex payback and have even more conviction than we already had that the investment we're making in AWS will yield a much larger revenue and free cash flow-generating business than we would have imagined a couple of years ago, with strong return on invested capital.
-- Andy Jassy, Chief Executive Officer

The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.