Amazon plots cloud expansion as AWS hits $71B run rate

Amazon executives outlined plans to spend big to add more regions and capacity for its Amazon Web Services (AWS) cloud business, after the unit posted 40% revenue growth in Q4 2021.

During the quarter, net sales for AWS jumped to $17.8 billion, up year on year from $12.7 billion. Operating income also rose double digits, increasing 48% to $5.3 billion.

Amazon CFO Brian Olsavsky said during an earnings call AWS added more revenue year over year in Q4 “than any quarter in its history,” adding the unit is “now a $71 billion annualized run rat business.” That compares to its status as a $51 billion run rate business a year ago.

On Twitter, Moor Insights and Strategy founder and chief analyst Patrick Moorhead called AWS an “absolute cash machine” and pointed out its run rate is now more than twice that of Salesforce.

Olsavsky said Amazon is planning to invest heavily to provide AWS room to grow, stating “we're adding regions and capacity to handle, you know, usage that still exceeds revenue growth in that business.” He added while it’s still working on its plans for 2022, “we see the capex for infrastructure going up.”

All told, the CFO said just under 40% of Amazon’s capital expenditures are going towards infrastructure, with most of that “feeding AWS.”

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AWS currently has 84 Availability Zones across 26 global Regions. It has announced plans to launch 24 more Availability Zones and eight more Regions over the coming years. Among these is the company’s second infrastructure region in Canada, which it expects to light up in late 2023 or early 2024. All told, Amazon said it plans to spend over $17 billion by 2037 to build and run both of its cloud regions in the country.

Consolidated revenue rose 10% year on year to $137.4 billion, with profit of $14.3 billion up from $7.2 billion the year prior. Olsavsky noted the latter figure received an $11.8 billion boost from Amazon’s investment in Rivian Automotive, which had an initial public offering in November.

Market landscape

Synergy Research Group (SRG) estimated overall revenue in the cloud market hit $50.5 billion in Q4, with Amazon continuing to lead the pack with around a third of global market share. However, chief analyst John Dinsdale said in a statement "the battle for market share is getting more interesting" as Microsoft and Google continue to make gains. 

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According to SRG data, Microsoft's market share has steadily grown over the last few years, rising nearly nine percentage points between the end of 2017 and the recent quarter to hit 21%. Meanwhile, Google's share has risen from around 6% to nearly 10% over the same timeframe. By contrast, Amazon's share has remained fairly consistent.

"The rising tide continues to lift all boats, but some are being lifted more swiftly than others," Dinsdale concluded.

This story has been updated with data from Synergy Research Group.