Key Points
Amazon is the world's top cloud computing infrastructure provider.
Amazon Web Services is already seeing demand for 2028 due to compute constraints.
When you think of artificial intelligence (AI) companies, Amazon (NASDAQ: AMZN) may not be a name that jumps to the top of the list. However, with its cloud computing business delivering an incredible 37% year-over-year growth rate, I think it's a force to be reckoned with. While there may be companies that are growing faster than that, Amazon's growth rate is picking up, and it could stay hot for several years based on the company's massive investments in AI computing infrastructure.
This could lead to Amazon being one of the biggest winners in the next phase of the AI arms race, and if you don't own shares already, it isn't too late to buy.
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Amazon Web Services is a top reason to own the stock
Amazon Web Services (AWS) is Amazon's cloud computing division. It's the No. 1 competitor by market share, with about 28% last quarter. In Q2, it accounted for 21% of the company's total revenue, but 60% of its operating profits. That's an incredible contribution from a small business unit, and with AWS growing rapidly, Amazon as a whole will benefit.
While the other two cloud computing titans -- Alphabet's Google Cloud (15% market share) and Microsoft Azure (20% market share) -- reported faster growth than AWS, what investors must understand is that AWS' growth rate is rapidly accelerating. In Q3 2025, AWS' growth rate was 20%. In Q4 2025 and Q1 2026, its year-over-year growth accelerated to 24% and 28%, respectively. In Q2, the growth rate jumped further to 37%, and it likely isn't done there.
Amazon is spending the most of any AI hyperscaler on computing infrastructure this year, with capital expenditures expected to total around $220 billion. All of that spending will eventually convert into increased computing capacity, which will in turn lead to increased revenue. A larger revenue base will allow Amazon to invest even more in data center infrastructure, creating a growth flywheel that should send Amazon stock soaring, as long as there is demand for compute.
Fortunately for Amazon shareholders, it's pretty clear that there is.
During its Q2 conference call, CEO Andy Jassy noted that the company doesn't have enough capacity to meet all available demand in 2026, and that 2027 is also shaping up to be that way. As a result, there's already demand for capacity that it won't have online until 2028. Having that type of visibility into sales growth that's almost a year and a half out bulks up the Amazon investment thesis.
Amazon's growth rate will remain strong over the next few years, driven by its robust cloud services offerings. As a result, I think Amazon is one of the best AI stocks to buy now and hold for the long term.
Keithen Drury has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.