Amazon Web Services Backlog Reaches $578 Billion Amid Capacity Constraints

Amazon Web Services (AWS) has announced a staggering backlog of $578 billion in contracted future business, a figure that has more than doubled year-over-year. According to Amazon CEO Andy Jassy, this backlog reflects a growing demand for AWS services, particularly in the realm of artificial intelligence (AI), which requires substantial computing resources.

The backlog increased by $82 billion from the previous quarter, where it stood at $496 billion. In contrast, AWS revenue for the second quarter of 2026 grew to $42.2 billion, marking a 37% increase year-over-year, but still lagging behind the rapid accumulation of contracts.

Jassy has indicated that AWS's cloud capacity for 2026 is sold out, with much of 2027 also booked. This situation has prompted Amazon to raise its capital expenditure forecast for 2026 to approximately $220 billion, up from an earlier estimate of $200 billion, primarily due to rising memory costs associated with building data centers for AI workloads.

Despite the impressive revenue growth, analysts have pointed out that AWS is struggling to convert its backlog into revenue quickly enough, largely due to data center and supply chain bottlenecks. As a result, while AWS operating income rose to $17.8 billion from $11.4 billion a year earlier, there are concerns about the sustainability of this growth if capacity issues persist.

Investors are now closely watching Amazon's ability to bring new data centers online and manage component costs, as these factors will be crucial in determining whether the company can effectively meet the soaring demand for its services.