Once upon a time, the word "cloud" referred only to the white, puffy things you see in the sky. That's no longer the case. And one company played an especially key role in expanding the definition to include access to computing and storage resources on the internet: Amazon (AMZN 2.51%).
To be sure, Amazon didn't invent cloud computing. However, the company's 2006 launch of Amazon Web Services (AWS) was a milestone in information technology infrastructure. Today, Amazon sits atop an artificial intelligence (AI) cloud empire. Here's why AWS still reigns supreme.
Image source: Getty Images.
1. Accelerating momentum
You might read now and then that other cloud service providers are gaining ground on AWS. That's true. Microsoft (MSFT 2.05%) Azure, Alphabet's (GOOG 0.19%) (GOOGL 0.46%) Google Cloud, and Oracle's (ORCL 4.26%) cloud unit are all growing faster.
However, AWS' revenue soared 20.2% year over year in the third quarter of 2025 to $33 billion. That's the fastest growth rate since 2022.
Amazon CEO Andy Jassy is quite aware of the competition in the cloud market. However, he noted in his company's Q3 earnings call, "It's very different having 20% year-over-year growth on a $132 billion annualized run rate and to have a higher percentage growth rate on a meaningfully smaller annual revenue, which is the case with our competitors."
Importantly, AWS' backlog rose to $200 billion by the end of Q3. Jassy said this figure didn't include new deals made in October that together were greater than its total deal volume for the entire third quarter.
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Key Data Points
2. Giving customers the tools they need
Gartner (IT 2.85%) has named AWS the leader in its strategic cloud platform services Magic Quadrant in each of the last 15 years. How is Amazon's cloud unit still on top? By giving customers the tools they need.
Jassy believes that AWS offers "much broader infrastructure functionality" than rivals. In Amazon's Q3 earnings call, he highlighted two products that help customers build AI models -- SageMaker and Bedrock. SageMaker enables organizations to build and deploy their own large language models (LLMs), while Bedrock supports an array of the leading third-party models.
Agentic AI is the next big thing in the AI world. AWS introduced AgentCore earlier this year to help customers develop secure and scalable AI agents. Jassy mentioned that the software development kit for AgentCore "has already been downloaded over 1 million times."
This isn't the only agentic AI solution from AWS, though. Amazon's cloud unit recently previewed its Kiro integrated development environment for agentic AI coding. Jassy said that more than 200,000 developers have already checked it out. AWS also released its Transform agent for data migration and transformation. Customers have used the tool to reduce roughly 700,000 hours of manual effort so far this year.
3. Unrivaled capacity
In the AI cloud market, capacity is king. And that requires massive amounts of power.
AWS added more than 3.8 gigawatts of power in just the last 12 months. That's more than any other cloud provider. Amazon's cloud unit now has double the power capacity that it had in 2022. It's on pace to double the power capacity again by 2027.
Cloud capacity to run AI applications also requires super-fast chips. Like other top cloud providers, AWS uses Nvidia's (NVDA 2.31%) GPUs. It also buys chips from AMD (AMD 7.83%) and Intel (INTC 3.54%). However, AWS has developed its own AI chips, too. Jassy said in the Q3 update that the unit's Trainium chip "is now a multibillion-dollar business that grew 150% quarter over quarter."
Look for AWS to aggressively boost capacity going forward because of strong demand. Jassy summarized Amazon's opportunity by saying, "As fast as we're adding capacity right now, we're monetizing it."
More than AWS
Amazon has other growth drivers in addition to AWS. The company remains the 800-pound gorilla in e-commerce, with robust sales and earnings growth. Advertising is an especially bright spot. Amazon is also expanding into new markets, including satellite internet services.
Perhaps AWS will eventually be dethroned as the No. 1 cloud service provider. If that happens, though, the cloud unit will probably continue to deliver strong growth. And with its other strong businesses, Amazon could still reign supreme even if AWS doesn't.
