AWS Commitments Near $496 Billion as Sales Grow 37% in Second Quarter

Key Facts

Amazon had about $496 billion in unrecognized future performance obligations as of June 30, 2026, primarily related to AWS, according to the company’s filing with the U.S. Securities and Exchange Commission. The average remaining term of long-term contracts was 6.4 years, placing part of the contracted demand on a multiyear horizon. In the second quarter, AWS sales rose 37% year over year, compared with growth of 28% in the first quarter, according to the Associated Press. The agency said the increase was the fastest in 18 quarters. Together, these figures show a large contract backlog and accelerating sales, while the timing of converting obligations into revenue remains tied to actual use of the services and contractual performance.

The company’s disclosure provides an important detail about the nature of that backlog: the $496 billion represents obligations not yet recognized for contracts with an original term of more than one year, not revenue already realized. Amazon said in its filing that “the amount and timing of revenue recognition will be determined by customer usage and our performance under contractual obligations.” This means the value of the obligations alone does not determine when they will appear in sales, since revenue recognition depends on customer usage and the company’s fulfillment of its commitments. The average remaining term of long-term contracts is 6.4 years, according to the same disclosure. AWS Chief Financial Officer John Felton described the backlog as approaching $500 billion and said it includes large companies, AI labs, and small and medium-sized businesses, according to an interview with Axios published on October 16, 2026.

Revenue growth also extended to improved operating profitability for the unit. AWS operating income was about $16.6 billion in the second quarter of 2026, compared with $10.2 billion in the same period of 2025, according to Amazon’s results filed with the Securities and Exchange Commission. The increase coincided with 37% year-over-year sales growth for the unit, after a 28% gain in the previous quarter. The improvement in operating income provides financial context for the expansion of cloud computing, while the available facts do not include an official operating margin figure in the earnings release. Felton said that “demand is real,” adding that AWS’s investments in AI servers generate a return in less than 3 years. That was the CFO’s estimate of the payback period for those servers, alongside his emphasis on strong demand.

But the expansion is weighing on cash flow as investment in infrastructure increases. Amazon recorded a free cash flow outflow of $7.6 billion in the 12 months ended June 30, 2026, compared with an inflow of $18.2 billion in the 12 months ended June 30, 2025, according to the company’s results. Amazon attributed the decline mainly to a year-over-year increase of $66.1 billion in purchases of property and equipment, net of sales proceeds and incentives, and said the increase primarily reflected AI investments. The Associated Press reported that the company expects capital expenditures of $220 billion in 2026, also covering robotics, semiconductors and satellites. That estimate exceeds the $200 billion investment plan announced in February and capital spending of $128 billion in 2025. Andy Jassy told investors that even at a spending level of $220 billion, Amazon would not have enough capacity to meet all demand this year, adding that “the demand we already have for 2028 is striking.”

Amazon shares had risen more than 9% in after-hours trading on July 30 following the second-quarter results, according to the Associated Press; the agency said investors were assessing whether the company’s AI spending had begun to pay off. The shares closed at $248 on October 23, 2026, according to EL7 data. The contracted-demand reading comes alongside financial performance and spending as third-quarter results approach. Amazon is scheduled to report results on October 29. The upcoming results will provide a comparison between actual performance and the company’s expectations, as well as an update on sales and cash flow after the investment expansion. The $496 billion in obligations remains an indicator of future contracted business, while the timing of its recognition as revenue depends on customer usage and the fulfillment of obligations.