Will AWS segment operating margin fall below 28% in any two consecutive reported quarters by Q3 2026?

AWS margins have remained above 32% throughout 2025, with the lowest point being 32.9% in Q2 2025 -- still nearly 500bps above the 28% threshold. While $200B capex will mechanically increase depreciation and pressure margins through 2026, the requirement for TWO CONSECUTIVE quarters below 28% makes this a compound event requiring a ~700bps sustained decline from current levels. Revenue growth acceleration and pricing power provide meaningful offsets to depreciation headwinds.

AWS margins would need to drop over 700bps from current levels (~35%) to breach 28%, and sustain that for two consecutive quarters. Even the sharpest single-quarter decline in 2025 (660bps) only brought margins to 32.9%, well above the threshold. While $200B capex will pressure margins through rising depreciation, 24% revenue growth and management's demonstrated ability to manage margin cadence make two consecutive sub-28% quarters extremely unlikely within this timeframe.

AWS margins would need to drop 700-1150bps from current levels to fall below 28%, and this would need to happen in two consecutive quarters out of only three reported. Even with $200B capex driving higher depreciation, the ramp is gradual -- most 2026 capex won't fully depreciate until 2027+. Management demonstrated active margin management in 2025, recovering from the 32.9% Q2 trough to 35.1% by Q4, and the structural floor identified by the committee (25-28%) represents an extreme scenario, not a base case.

Requires two consecutive quarters below 28%, a 710bps drop from Q4 2025's 35.1% level, sustained across quarters. While $200B capex creates depreciation headwinds and Azure competition pressures pricing, the 490bps buffer above 28% from 2025's lowest quarter (32.9%), gradual depreciation lag, and 24% revenue growth providing offset make consecutive sub-28% quarters unlikely. Single-quarter volatility (660bps) insufficient to cross threshold twice in sequence.

The $200B capex spike creates significant depreciation pressure (300-500bps) that could push margins from 35% toward the 28% threshold. However, 24% revenue growth provides substantial offset, and even stress scenarios place the floor at 25-28% -- meaning two consecutive quarters below 28% requires sustained deterioration, not just timing volatility. The narrow Q1-Q3 window (only 2 consecutive pairs possible) further constrains probability.

AWS has never reported sub-28% margins in recent history, with the lowest recent quarter at 32.9% (490bps above threshold). While $200B capex will increase depreciation pressure, 24% revenue growth provides a natural offset, and management demonstrated margin recovery capability (Q2 to Q3 to Q4 2025). Requiring TWO consecutive quarters below 28% in a three-quarter window makes this extremely unlikely given the 700bps drop needed from current levels and AWS's consistent margin management track record.

AWS's lowest 2025 margin was 32.9%, requiring a 490bps decline to breach 28%. While $200B capex increases depreciation mechanically, 24% revenue growth and management's demonstrated ability to recover margins (Q3/Q4 recovery after Q2 dip) make two consecutive quarters below 28% unlikely. Azure competitive pressure is present but insufficient to overcome AWS's strong revenue growth offsetting cost pressures.

Two consecutive sub-28% quarters requires sustained margin compression. While $200B capex adds 300-500bps depreciation pressure and AI workload mix may pressure pricing, 24% revenue growth partially offsets. The lowest 2025 quarter was 32.9%, requiring 490bps compression in two consecutive quarters -- mechanically possible but requires both depreciation surge AND competitive pricing simultaneously.

AWS has demonstrated consistent margin resilience with only Q2 2025 dipping to 32.9%, still 490bps above the 28% threshold. While $200B capex creates depreciation pressure and revenue deceleration could strain margins, 24% revenue growth and management's proven recovery ability make consecutive sub-28% quarters unlikely within the narrow Q1-Q3 2026 window.