Amazon’s dominance in cloud computing is being tested as customers and investors shift attention to generative AI capabilities, but the gap with competitors does not amount to an immediate existential threat, according to a new Bernstein Research note. The firm estimates that Project Rainier — Amazon’s AI-focused initiative — could account for as much as 2.6 percent of AWS revenue in 2026 and exceed 4 percent in 2027, figures that suggest AI features can move the needle for an already-large business.

Bernstein’s projections underscore why the company remains central to the cloud conversation even as critics label it “last place” in the AI cloud race. The research house expects AWS revenue to grow 18 percent this year to $127 billion, with 21 percent growth in both 2026 and 2027. Those compound increases reflect not only new AI products but ongoing demand for infrastructure, storage and enterprise services that form the bulk of AWS’s sales.

Developer activity provides an early signal that AWS could accelerate AI monetization. Bernstein notes that developer engagement with AWS services has risen since the beginning of the year and picked up further momentum over the summer, a trend that typically precedes commercial adoption. The firm’s analyst, Shmulik, wrote, "While the long-term debate is likely to have several twists and turns, we take a favorable view of the cloud market leader figuring out AI in-time with multiple ways to win." He also anticipates stronger revenue growth for AWS in the third quarter and continued gains in the fourth quarter.

Those dynamics matter because a few percentage points of incremental AI-driven revenue on top of a $127 billion business represent substantial dollars. If Project Rainier reaches the higher end of Bernstein’s estimates, AWS could be looking at several billion dollars in additional revenue within a couple of years — a meaningful contribution even if it does not immediately displace rivals’ lead in specialized AI services.

Market implications hinge on AWS’s ability to convert developer interest into enterprise contracts and to integrate AI tooling without eroding existing margins. AWS still benefits from deep enterprise relationships, a broad product portfolio and a global footprint that competitors find difficult to match. For investors, the question is whether those structural advantages will offset any temporary loss of mindshare to competitors that have moved faster to package large language models and AI platforms as turnkey services.

Regulatory and policy risks also shadow the field as governments scrutinize data protection, model provenance and competitive practices in cloud markets; these factors could influence how quickly firms can scale AI offerings across regulated industries.

Amazon did not respond to a request for comment. For now, the data point to a market where falling behind in headline AI features is costly but not necessarily terminal: scale, steady revenue growth and rising developer engagement give AWS multiple pathways to convert AI investments into durable business gains.