Amazon’s $110 billion cloud business is minting profits even amid the expensive gen AI arms race—but for how long?

For the quarter, Amazon generated $1.43 in earnings per share on $158.9 billion in overall revenue, beating average analyst estimates of $1.14 per share and $157.2 billion, respectively. But it was Amazon Web Services, the company’s cloud-computing business—which has become a major growth driver, particularly in the AI era—that really stood out in the fiscal third-quarter results.

AWS operating income grew 50% year over year to $10.4 billion. Meanwhile, revenue in the unit rose 19% from the same period a year earlier to $27.5 billion, in line with analyst expectations.

The division’s operating profit margin was 38%, accelerating from 30% in the same period last year. The robust profits came even as Amazon, like its Big Tech peers, invests heavily in its own AI consumer products while also expanding its offerings of AI services and building blocks to corporate customers.

But one unknown is how those profits will look as AWS’s multibillion-dollar generative AI business—in which sales are growing more than 100% year over year—develops into a larger piece of the overall Amazon Web Services business, as one analyst asked Amazon CEO Andy Jassy on Thursday’s earnings call.

Jassy acknowledged that Amazon must invest heavily in AI infrastructure like data centers and chips before they are monetized or sold, but posited that “there are going to be very healthy margins here in the generative AI space” over time.

For now, Amazon continues to ramp up capital spending overall, with a particular focus on expanding its data center network to support its more mature AWS businesses as well as gen AI. Increased automation and robotics investments in Amazon’s warehouse network are also playing a role in the bigger spending.

“We really do believe that AI is going to be a big piece of what we do in the robotics network,” Jassy said of the company’s continued drive to automate work within its warehouses.

Capital expenditures are expected to total $75 billion by the end of this year, company leaders said, meaning those investments will have increased 50% in the back half of the year from the roughly $30 billion spent in the first six months. Amazon will likely surpass that $75 billion total in 2025, Jassy told analysts on the call, potentially cutting into short-term profits in favor of what he called “a maybe once in a lifetime opportunity.”

“The faster we grow demand, the faster we have to invest capital,” the CEO said of its gen AI businesses.

AWS’s operating margin was also boosted two percentage points in the quarter by an accounting change related to how Amazon judges the useful life of its data centers. Another contributor to expanded margins in AWS was a “measured” pace in hiring.

“Our office staff [count] is down slightly year over year,” an official told analysts.

Revenue in Amazon’s core e-commerce business grew 8% to $61.4 billion on the back of a wider selection of lower-priced goods and the company’s fall sale event for Prime members. Jassy said the company continues to increase delivery speeds as it works through a multiyear restructuring of its North American warehouse network into eight regions. Last quarter, 40 million Prime customers received same-day orders at no extra cost, up more than 25% year over year, Jassy said.

Are you a current or former Amazon or AWS employee with thoughts on this topic or a tip to share? Contact Jason Del Rey at jason.delrey@fortune.com, jasondelrey@protonmail.com, or through messaging apps Signal and WhatsApp at 917-655-4267. You can also message him on LinkedIn or at @delrey on X.

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