Speaking after the announcement of Amazon's lacklustre second quarter results, Jassy insisted that AWS remains a bigger, better beast than its rivals. He even claimed AWS is still in the early stages of a $123 billion-a-year revenue run rate. Apparently, the only thing holding it back is infrastructure.
He said: "We have more demand than we have capacity right now. We could be doing more revenue and helping customers more, and we are working very hard on changing that outcome and how much capacity we have. I do expect it’s going to get better each quarter, and I’m optimistic about that."
Apparently, AWS is struggling to get enough power, chips and working servers to keep up. The result is a rare case of too much business and not enough kit.
Jassy batted away suggestions that AWS is trailing in the AI race, claiming a parade of chatbots, coding agents and other GenAI toys are running on its platform. Claude maker Anthropic is putting its models through the paces using Amazon’s custom Trainium chips.
He said: "The number of agents at scale is still really small in the scheme of what’s going to be the case. Part of the problem is it is actually hard to build agents, and it’s hard to deploy these agents in a secure and scalable way."
Jassy believes AWS has the upper hand because it’s where all the legacy sludge lives. He rattled off migration support for mainframes, VMware, and .NET as feathers in AWS’s cap. Apparently, customers will eventually want AI next to their other data.
He pointed to the success of Amazon’s open-source AI SDK, Strands, which racked up 2,500 GitHub stars. Amazon's shiny new IDE coding agent Kiro also pulled in hundreds of thousands of devs in weeks.
It all sounds lovely, but margins told a different story. AI investment cut AWS’s operating margin from a record 39.5 per cent down to 32.9 per cent. CFO Brian Olsavsky said the $31.4 billion in capital spending last quarter was mostly AWS AI spend and would be the norm for the rest of the year.
When asked about Microsoft’s galloping cloud numbers, Jassy pointedly called it the "second place player" without naming names. He claimed AWS was still about 35 per cent larger, sniffing at growth rates as temporary blips.
"These are all really just moments in time. Sometimes others are growing faster than us, sometimes we’re going faster."
Jassy couldn’t resist a dig at Redmond’s security woes either. Pointing at recent SharePoint issues, he said:
"You can just see the adventures of some of these players (experience) almost every month. So very big difference, I think, in security."
He flagged progress in Amazon’s Project Kuiper, the satellite broadband rival to Starlink. Despite no launch yet, the service has already inked deals with governments and enterprises that apparently want seamless AWS uplinks.
At quarter’s end, AWS had a backlog of $195 billion, up 25 per cent from last year. Sales hit $30.9 billion, up 17.5 per cent, with operating income at $10.2 billion.
Amazon’s total third-quarter forecast is $174 billion to $179.5 billion in sales, translating to 10 to 13 per cent growth. AWS projections, conveniently, weren’t broken out.
As for tariffs and supply chain kerfuffle, Jassy admitted he has no clue where that’s heading. "It’s hard to know where the tariffs are going to settle, particularly in China," he said. "We just haven’t seen diminished demand."
Amazon.com stock was down about seven per cent after hours, hovering around $220 a share.