It's pretty well understood in the industry that EC2 is a cash cow for Amazon. I wouldn't be surprised if their operating costs were 10-30% of the hourly rates

It's pretty well understood in the industry that EC2 is a cash cow for Amazon. I wouldn't be surprised if their operating costs were 10-30% of the hourly rates they charge (based on back-of-the-napkin calculations like you did, but also based on their competitors' rates which are much lower). However, the cash flow generated by EC2 is likely negative as I believe that (1) all the profits are re-invested in expanding, and that (2) Amazon injects money into it from other sources.