Amazon Invests $7.2B, Launches AWS Services in Israel

Amazon on Tuesday said its Israel investment would top $7.2 billion through 2037 while also launching its Amazon Web Services (AWS) data centers in the country.

The expansion will bring AWS to 32 geographic regions, and boost Israel’s gross domestic product by $13.9 billion, the company said. Amazon estimates the new AWS region will support an average of 7,700 full-time jobs annually.

“The establishment of the region will enable us to migrate substantial government workloads to the cloud and we are confident that it will help us accelerate digital transformation in the public sector, leverage technology to drive innovation in the government, improve customer experience, and further the development of the technological ecosystem in Isreal,” Yali Rothenberg, accountant general of Israel, said in a statement.

Amazon will report second quarter earnings Thursday (Aug. 3) after trading closes, and analysts expect cloud sales to be a major contributor to the company’s report. If cloud sales stay on track, they could be the crown jewel in Amazon’s earnings report even as sales slow. In the first quarter of 2023, AWS netted sales of $21.4 billion, a 16% increase year-over-year. Zacks Consensus estimates AWS will report net sales of $21.5 billion for Q2, and that would be the slowest sales growth in years for the company.

“The launch of the AWS Region in Israel provides customers with the ability to build the most advanced cloud technology-based applications and achieve the highest levels of security, availability, and resilience,” Prasad Kalyanaraman, vice president of Infrastructure Services at AWS, said in a statement. “Israel’s strategy to promote technology innovation, along with its abundance of talent, has created a thriving global hub for entrepreneurs, e-governments, and multinational businesses.”

Amazon launched its online retail presence in Israel in 2019. In 2021, Israel signed deals with Google and AWS for more than $1 billion. In 2022, Google opened a local cloud region enabling cloud services for government and military officials.

AWS is planning more offerings in Canada, Malaysia, New Zealand, and Thailand.

AWS CEO Adam Selipsky took to social media to tout the new investment strategy. “The AWS Israel (Tel Aviv) Region is now open, giving customers greater choice for running their applications and security storing data in Israel while serving end users with even lower latency,” Selipsky said in a Tuesday post on LinkedIn.