Amazon Web Services (AWS) is set for an annualized revenue run rate of $100 billion.

In the company's 2024 Q1 financial results, the cloud giant revealed that its first quarter has seen revenue of $25 billion, representing Year-on-Year (YoY) revenue growth of 17.2 percent, up from 13.2 percent in Q4 of 2023.

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– Sebastian Moss

This is notably slower growth than rivals Google and Microsoft posted in their respective earnings calls, with the competitors up 28 percent and 24 percent respectively. However, it is not possible to fully compare hyperscaler revenues as they define cloud services differently.

Of that $25 billion in revenue, $9.4bn was operating income, an increase of $4.3bn YoY. A chunk of this was put down to AWS' decision to run servers for six years, a decision that "primarily benefits the AWS segment."

CEO Andy Jassy told investors during the earnings call: "It's useful to remember that year-over-year percentages are only relevant relative to the total base from which you start. And given our much larger infrastructure cloud computing base, at this growth rate, we see more absolute dollar growth again quarter over quarter in AWS than we can see elsewhere."

On the CapEx side, AWS is anticipating a year of increased spend. In 2023, the company's capital investments (which include CapEx and finance leases) totaled $48.4 billion.

According to Brian Olsavsky, CFO of Amazon, Q1 of 2024 saw a CapEx of $14 billion, which the company expects to be the low quarter of the year.

"We anticipate our overall capital expenditures to meaningfully increase year over year in 2024, primarily driven by higher infrastructure CapEx to support growth in AWS, including generative AI."

Generative artificial intelligence (AI) is among the drivers which CEO Jassy hopes will continue to help AWS grow, with Jassy noting that the company has the "broadest selection of Nvidia compute instances around."

In addition, he cited the increased momentum of cloud computing in general.

"Before the pandemic, companies were marching to modernize their infrastructure, moving from on-premises infrastructure to the cloud to save money, innovated at a more rapid rate, and to drive more developer productivity. The pandemic and uncertain economy that followed distracted from that momentum, but it's picking up again."

According to Jassy, despite the company being on the path to $100bn in revenue, around 85 percent or more of the global IT spend remains on-premises.

"The more demand AWS has, the more we have to procure new data centers, power and hardware. And as a reminder, we spend most of the capital upfront. But as you've seen over the last several years, we make that up in operating margin and free cash flow down the road as demand steadies out."

As for Q2, Amazon is expecting sales of between $144 billion and $149 billion – growth of seven to eleven percent YoY.