No company has ever had a business with $1 trillion in annual revenue. Andy Jassy says Amazon is on a path to have two.

Amazon Web Services and the company’s stores business could both reach that milestone in the next five to 10 years, the Amazon CEO said Thursday in the company’s third-quarter earnings release and on its call with analysts.

It’s “pretty rare” for Jassy to make a projection that far out, Morgan Stanley analyst Brian Nowak observed on the call, asking how he gets there.

Jassy’s answer started with AWS, which is at a $184 billion annual revenue run rate after growing 39% in the third quarter. He expects growth of more than 40% in both 2027 and 2028, and pointed to a $578 billion backlog of contracted AWS revenue.

The largest customers reserve capacity in huge blocks, sometimes as much as a gigawatt at a time, giving Amazon “very good visibility” into 2027, 2028 and part of 2029, he said.

Beyond that, he said, businesses are still early in using AI, the cost of running AI models keeps falling, and new uses keep emerging, such as AI models finding and fixing security flaws.

“You can’t predict with any certainty five to 10 years from now, especially at these types of growth rates,” Jassy said of AWS. “But it’s not a stretch for us to imagine that this could be over a trillion dollar business.”

Jassy’s forecast is a big jump from seven months ago. In March, Jassy told employees that AWS had a chance to reach at least $600 billion in annual revenue within about a decade, double his earlier expectation, according to Reuters.

Amazon’s stores business is bigger than AWS. Sales from Amazon’s online and physical stores totaled $309 billion over the past 12 months, or about $575 billion if Jassy is including third-party seller services and advertising in his trillion-dollar projection. We’ve asked Amazon to clarify.

For comparison, Walmart, the world’s largest retailer, had $713 billion in revenue in its most recent fiscal year.

Whichever numbers he’s using, Jassy said “some folks are sleeping a bit” on how much progress the stores business has made.

Jassy argued that Amazon’s stores business is gaining ground on competitors. Amazon added more than $90 billion in gross sales over the past 12 months, he said, and is adding about twice as much per quarter as its next-largest U.S. competitor.

Units sold are up nearly 15% so far this year, Jassy said. He noted that nearly 80% of retail sales still happen in physical stores, which he expects to shift online over time.

The bold prediction came on a rough day for the company. Amazon shares fell about 6% in after-hours trading after its profit fell short of Wall Street’s expectations.

It’s not going to be cheap to get there. Amazon expects to spend about $220 billion on capital projects this year, mostly for AWS, and Jassy said the company will spend “meaningfully more” in 2027. He said Amazon has “a clear line of sight to attractive financial returns” and is earning back its capital spending faster than before.

The impact is showing up in Amazon’s finances. Its free cash flow, the cash left over after capital spending, was negative $42.4 billion over the past 12 months, compared with positive $14.8 billion a year earlier.

With its spending running ahead of the cash its businesses bring in, Amazon has raised $115 billion through long-term debt this year. Its interest expense more than tripled in the third quarter to $1.7 billion, cutting into its profit.

“We’re in the very early days of this inflection,” Jassy said. “Our strategy is working, and I expect it will for the foreseeable future.”

Amazon Web Services revenue grew 39% to $46 billion in the third quarter, its fastest pace in nearly five years, and Amazon CEO Andy Jassy said he expects the cloud unit to top 40% growth in both 2027 and 2028.

That wasn’t enough for investors. Amazon posted earnings of $1.89 per share, well short of the $1.97 analysts expected, as higher interest costs on its growing debt and other losses ate into its profit.

Operating income beat expectations at $28.1 billion, above the high end of Amazon’s own guidance, and the 13.9% operating margin for the quarter was the highest in the company’s history.

Revenue of $201.9 billion, up 12%, came in just under analyst estimates but at the top of Amazon’s forecast range. Shares fell more than 7% in after-hours trading, after closing down 4% during the regular session.

Update: On the earnings call, Jassy said AWS has a backlog of $578 billion in contracted future revenue, more than double a year earlier. He also said Amazon expects to spend “meaningfully more” on capital projects in 2027 than the roughly $220 billion it plans for this year.

Amazon may need to count on its legendary willingness to be “misunderstood for long periods of time,” as it asks investors to look past the costs to where its biggest businesses are headed.

In the company’s earnings release, Jassy said Amazon’s retail business is gaining market share with improving margins. Retail sales, including online stores, physical stores and third-party seller services, totaled nearly $500 billion over the past 12 months, and AWS is now at a $184 billion annual revenue run rate.

“There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years,” he said.

On the earnings call, Jassy said those two businesses are AWS and Amazon’s stores business.

Advertising grew 11% to $19.6 billion, or 12% excluding currency changes, down from 22% on that basis a year earlier. Amazon blamed the timing of Prime Day and a few other factors, and said it expects ad growth to return to the high teens in the fourth quarter.

Online stores grew 2% to $68.5 billion, held back by Prime Day moving into the second quarter this year. Amazon said overall revenue growth would have been about 4 percentage points higher without the shift.

Third-party seller services, the fees Amazon collects from merchants on its site, grew 9% to $46.5 billion. AWS came within about $500 million of it.

Subscription services, which includes Prime memberships, grew 11% to $14 billion.

Physical stores, mostly Whole Foods, grew 2% to $5.7 billion.

Outlook: Amazon expects fourth-quarter revenue of $240 billion to $247 billion, up 12% to 16%, and operating income of $28.5 billion to $33.5 billion.

Wall Street had expected fourth-quarter operating income of $33.2 billion, near the top of that range, according to analyst Dan Ives of Yorkville Ives. It still expects to spend about $220 billion on capital projects this year.

Amazon CFO Brian Olsavsky said on the earnings call that costs for Amazon Leo, the company’s satellite internet service, are weighing on its fourth-quarter profit forecast as the service gets ready to launch later this year.

Amazon’s free cash flow, the cash left over after capital spending, was negative $42.4 billion over the past 12 months, compared with positive $14.8 billion a year earlier, mostly because of its AI investments.