AWS Growth: Is Amazon Closing the Gap with Azure and Google Cloud?

Walking the canyons of Wall Street this week, I heard the usual buzz about artificial intelligence, cloud computing, and which giant is winning the future. But a specific note from Rosenblatt Securities analyst Scott Devitt cut through the noise, landing on trading desks with a confident thud. His claim: Amazon’s formidable position in AI remains deeply underappreciated by the market. Initiating coverage with a $335 price target, Devitt’s team posits a future where Amazon Web Services (AWS) exits 2026 growing at a blistering 45%, a pace that would leave current Wall Street estimates of 38% in the dust. They see a path to $335 billion in revenue by 2028. In my years covering tech titans, these aren’t just numbers on a page; they’re a direct challenge to the prevailing narrative. The question hanging over the Financial District now is simple: does the data support this audacious optimism?

The short answer is that the foundation for acceleration is visibly hardening. Recent quarterly reports are the financial press’s primary source material, and Amazon’s filings tell a compelling story. AWS revenue growth has now climbed for five consecutive quarters, accelerating from 17% in the second quarter of 2025 to 37% in the most recent quarter, which ended June 30, 2026. That July 30th earnings release showed AWS revenue hitting $42.23 billion, its fastest growth rate in eighteen quarters. More telling, perhaps, are the commitments locked in for the future. The AWS backlog—representing the value of future revenue from signed contracts—stood at a staggering $496 billion, growing at a triple-digit pace year-over-year. Furthermore, Amazon disclosed that its standalone AI business and its custom chip division, Amazon Chips, have each surpassed a $25 billion annualized run rate, also expanding at triple-digit speeds. You don’t need a complex model to see the pattern; AI demand is injecting a powerful new growth serum into AWS’s veins.

Yet, in the high-stakes race among hyperscalers, relative performance is everything. Here, the picture becomes more nuanced, a reality I’ve seen play out repeatedly in earnings season analysis. While AWS’s 37% growth is its best in years, it currently places third in the growth rankings. For the same quarter, Google Cloud reported an eye-watering 82% surge, while Microsoft’s Azure grew 43%. This isn’t a one-quarter anomaly for Google; its cloud unit grew 63% year-over-year in the first quarter of 2026. Microsoft, for its part, reported that Azure revenue crossed $100 billion for the full fiscal year 2026, a milestone that solidifies its position behind AWS in sheer scale but ahead in recent expansion pace. On growth percentage alone, AWS appears the laggard.

But scale changes the calculus entirely, a fundamental truth in corporate finance that raw percentages can obscure. AWS’s $42.2 billion quarterly revenue translates to an annualized run rate of nearly $169 billion. This massive base means that even its slower percentage growth adds far more in actual dollars each quarter than its faster-growing rivals. Google Cloud, while expanding at a torrid pace, is growing from a smaller revenue base. So, the question of whether Amazon is “catching up” lacks a clean answer. By growth rate, it trails. By absolute dollar expansion, it leads. This duality is what makes the hyperscaler competition so fascinating to watch; it’s a simultaneous sprint and a battle of attrition.

Market sentiment and valuation reflect this complex standing. Currently, Amazon trades at roughly 22 times forward earnings, according to consensus data from Bloomberg. This places it roughly in line with Microsoft’s 24x multiple and above Alphabet’s 17x. This premium suggests investors are already pricing in significant margin expansion, likely fueled by the high-profit nature of AI and cloud services. Rosenblatt’s thesis echoes this, noting that increased customer spending on AI applications often drives increased usage of core AWS infrastructure, creating a compounding benefit. The smart money seems to be leaning into this story. While overall hedge fund ownership of AMZN dipped slightly in Q1 2026, recent SEC filings analyzed by financial data providers like Fintel reveal significant moves by major growth-focused funds in Q2. Coatue Management, for instance, increased its stake by an estimated 49%, while Arrowstreet Capital raised its position by 24%. These aren’t passive bets; they are concentrated, informed votes of confidence in Amazon’s cloud and AI trajectory.

The ultimate verdict, however, remains pending. AWS is demonstrably accelerating, yet it still trails Google Cloud and Microsoft Azure in growth rate. Whether it can close that gap is the multi-billion-dollar question for the coming quarters. This quarter’s impressive numbers haven’t settled the debate; they’ve simply raised the stakes. The sheer magnitude of AWS’s backlog and the explosive growth of its dedicated AI segment provide a credible roadmap to the accelerated future Rosenblatt envisions. But in the cloud wars, as in the markets I report on daily, today’s leader can be tomorrow’s aspirant. The only certainty is that the data in the next few earnings releases will be scrutinized like never before, as investors decide if Amazon’s AI engine is merely powerful or truly transcendent.

• Artificial Intelligence
• Cloud Computing
• AWS Revenue Growth
• Amazon Chips
• Market Sentiment
• Hedge Fund Movement