The Amazon Web Services (AWS) backlog reached $578 billion and is growing at triple-digit rates. AWS sales, however, grew 39.3% to $46 billion.
Amazon missed earnings estimates, and shares fell more than 7% in after-hours trading. Trailing free cash flow swung to an outflow of $42.4 billion, versus an inflow of $14.8 billion a year earlier.
Why is the AWS backlog outrunning revenue?
Backlog rose $82 billion from the second quarter, according to the earnings call. In contrast, quarterly AWS sales added $3.8 billion.
A year earlier, the backlog stood at $200 billion. It has nearly tripled while sales grew 39.3%. AWS added $4.6 billion in sequential sales during the second quarter, so the latest gain was smaller.
Jefferies analyst Brent Thill says cloud providers cannot turn backlog into revenue as quickly as investors want.
He points to data center and supply chain bottlenecks as the cause.
Amazon CEO Andy Jassy said last quarter that Amazon lacked capacity for 2026 demand and expected the same in 2027.
Meanwhile, Jassy said Amazon installs an AI accelerator about every 14 seconds, with customers absorbing capacity almost as fast.
Can 40% growth justify a bigger spending bill?
Amazon now projects AWS growth above 40% in 2027 and 2028. AWS growth has accelerated for six straight quarters, from 20% in the third quarter of 2025.
Amazon also plans to spend substantially more next year than the roughly $220 billion budgeted for 2026. It raised that 2026 figure from $200 billion last quarter, citing higher memory costs.
Cash capital spending reached $75.9 billion in the third quarter alone.
However, AWS operating income rose to $17.8 billion from $11.4 billion a year earlier.
Microsoft and Alphabet reported a day earlier, and all three big tech earnings reports centered on AI infrastructure bills.
If delivery keeps lagging orders, investors may judge hyperscalers on data centers switched on rather than contracts signed. Faster capacity additions would narrow the gap and ease pressure on the spending plan.
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