Pershing Square Cites 39% AWS Growth and $600 Billion Backlog in Amazon Review

Amazon Web Services revenue growth accelerated to 39% in the third quarter of 2026, marking its fastest pace in nearly five years as its cloud backlog approached $600 billion, according to Pershing Square's third-quarter investor letter reported by Yahoo Finance (https://finance.yahoo.com/markets/stocks/articles/amazon-com-inc-amzn-could-194646878.html?.tsrc=rss).

The figures address a central debate across technology markets over whether aggressive artificial intelligence infrastructure spending will translate into durable revenue. Pershing Square noted that the AWS backlog grew at a triple-digit rate while cloud operating margins remained near historical peaks despite continuous capacity additions.

Amazon is on track to deploy approximately $220 billion in capital expenditures throughout 2026, with leadership indicating it expects to spend meaningfully more in 2027. Pershing Square argued that the outlays are backed by committed enterprise adoption rather than speculative capacity. According to the letter, Amazon management expects AWS to grow more than 40% annually in each of 2027 and 2028, with an internal target of reaching $1 trillion in annual cloud revenue within five to ten years.

Pershing Square also highlighted that Amazon's capital payback period for AWS investments continues to compress. The hedge fund projected that the resulting cash generation will allow Amazon to compound earnings at more than 20% over the long term. Outside cloud infrastructure, Amazon's retail segment recorded a 12% increase in paid unit volume, supported by broader e-commerce penetration and the early emergence of agentic shopping tools.

Amazon shares closed at $245.63 on November 2, 2026, giving the company a market capitalization of approximately $2.66 trillion. Pershing Square reported that Amazon stock rose 5% during the third quarter and 8% year-to-date, asserting that equity markets have focused excessively on capex figures while undervaluing projected free cash flow.

The cloud provider's next test will arrive as management formalizes its 2027 spending plans and reports whether AWS can sustain its near-40% top-line trajectory against an escalating capital spending baseline.