AWS Cloud Engineer Handbook

Table of Contents

Module 1: Compute & Serverless

AWS offers compute at every abstraction level — from bare-metal EC2 instances you fully manage, to Lambda functions where you only write the handler. Choosing the right compute model is the single highest-impact cost decision you will make.

Amazon EC2

Elastic Compute Cloud (EC2) provides resizable virtual machines in the cloud. You choose the Instance Type (CPU, memory, network), the AMI (operating system image), and the pricing model. EC2 is the foundation for most AWS workloads.

Instance Types

As of mid-2026, the 7th-generation Intel (m7i, c7i, r7i) and Graviton4 ARM (m8g, c8g, r8g) families are the current-generation standard. Always prefer current-gen for new deployments — they offer better performance and lower per-unit cost than prior generations.

AMIs (Amazon Machine Images)

An AMI is a pre-built OS snapshot. AWS provides Amazon Linux 2023, Ubuntu, and Windows Server base images. You can create custom AMIs with your dependencies pre-installed to speed up instance boot times. Custom AMIs are stored in S3 and incur storage costs.

Pricing Models

Console Navigation

Terraform — Launch an EC2 Instance

# terraform/ec2.tf — Production-ready EC2 instance

provider "aws" {
  region = "us-east-1"
}

resource "aws_instance" "web_server" {
  ami           = "ami-0c02fb55956c7d316"  # Amazon Linux 2023 (us-east-1)
  instance_type = "t3.medium"
  subnet_id     = aws_subnet.public.id

  vpc_security_group_ids = [aws_security_group.web_sg.id]

  # Use IAM Role instead of hardcoded credentials
  iam_instance_profile = aws_iam_instance_profile.ec2_profile.name

  root_block_device {
    volume_size = 30
    volume_type = "gp3"
    encrypted   = true
  }

  tags = {
    Name        = "web-server-prod"
    Environment = "production"
    ManagedBy   = "terraform"
  }

  metadata_options {
    http_tokens = "required"  # Enforce IMDSv2 — prevents SSRF attacks
  }
}

AWS Lambda

Lambda is a serverless compute service. You upload a function, define a trigger (API Gateway, S3 event, SQS message, schedule), and AWS handles all infrastructure. You pay only for the compute time consumed — billed per millisecond.

Key Constraints

Cold Starts & INIT Billing

A cold start happens when Lambda creates a new execution environment for your function. This includes downloading your code, starting the runtime, and running your initialization code. Cold starts typically add 100ms–2s of latency depending on runtime and package size.

Boto3 — Invoke a Lambda Function

# invoke_lambda.py — Invoke a Lambda function programmatically
import json
import boto3

# Create Lambda client (uses IAM Role credentials automatically on EC2/Lambda)
lambda_client = boto3.client("lambda", region_name="us-east-1")

# Synchronous invocation (RequestResponse)
response = lambda_client.invoke(
    FunctionName="my-data-processor",
    InvocationType="RequestResponse",  # Use "Event" for async
    Payload=json.dumps({
        "source_bucket": "raw-data-prod",
        "object_key": "uploads/2026/03/report.csv",
    }),
)

# Parse response payload
result = json.loads(response["Payload"].read())
print(f"Status: {response['StatusCode']}")
print(f"Result: {result}")

# Async invocation — Lambda queues the event and returns immediately
async_response = lambda_client.invoke(
    FunctionName="my-data-processor",
    InvocationType="Event",
    Payload=json.dumps({"mode": "batch"}),
)
print(f"Async status: {async_response['StatusCode']}")  # 202 = accepted

Terraform — Lambda Function with IAM Role

# terraform/lambda.tf — Serverless function with proper IAM role

resource "aws_iam_role" "lambda_exec" {
  name = "lambda-exec-role"

  assume_role_policy = jsonencode({
    Version = "2012-10-17"
    Statement = [{
      Action    = "sts:AssumeRole"
      Effect    = "Allow"
      Principal = { Service = "lambda.amazonaws.com" }
    }]
  })
}

resource "aws_iam_role_policy_attachment" "lambda_basic" {
  role       = aws_iam_role.lambda_exec.name
  policy_arn = "arn:aws:iam::aws:policy/service-role/AWSLambdaBasicExecutionRole"
}

data "archive_file" "lambda_zip" {
  type        = "zip"
  source_dir  = "${path.module}/src"
  output_path = "${path.module}/build/function.zip"
}

resource "aws_lambda_function" "processor" {
  function_name    = "my-data-processor"
  runtime          = "python3.13"  # python3.12/3.13 / nodejs22.x / java21 / dotnet10
  handler          = "handler.lambda_handler"
  role             = aws_iam_role.lambda_exec.arn
  filename         = data.archive_file.lambda_zip.output_path
  source_code_hash = data.archive_file.lambda_zip.output_base64sha256

  memory_size = 256
  timeout     = 30

  environment {
    variables = {
      ENV        = "production"
      LOG_LEVEL  = "INFO"
    }
  }

  tags = {
    ManagedBy = "terraform"
  }
}

# SnapStart — eliminates cold starts for Python 3.12+, .NET 8+, Java 21
resource "aws_lambda_function" "processor_v2" {
  function_name = "my-data-processor-v2"
  runtime       = "python3.13"
  handler       = "handler.lambda_handler"
  role          = aws_iam_role.lambda_exec.arn
  filename      = data.archive_file.lambda_zip.output_path
  source_code_hash = data.archive_file.lambda_zip.output_base64sha256
  publish       = true  # Must publish a version for SnapStart to cache

  snap_start {
    apply_on = "PublishedVersions"
  }

  memory_size = 256
  timeout     = 30
}

New Lambda Capabilities (2025–2026)

Amazon ECS vs EKS

Both services run containerized workloads. The choice depends on your team's Kubernetes expertise and portability requirements.

Module 2: Storage & Databases

AWS storage and database services range from object stores (S3) to fully managed relational (RDS) and NoSQL (DynamoDB) databases. Choosing the right storage tier and capacity mode is the most impactful cost decision after compute.

Amazon S3

Simple Storage Service (S3) is AWS's object storage. It stores data as objects inside buckets. Each object can be up to 5 TB. S3 provides 99.999999999% (11 nines) durability. It is the backbone for data lakes, backups, static website hosting, and log storage.

Storage Classes

S3 Select

S3 Select lets you retrieve a subset of data from an object using SQL expressions. Instead of downloading a 1 GB CSV and filtering locally, S3 Select pushes the filter to the storage layer — reducing data transfer by up to 400% and improving performance. It works with CSV, JSON, and Parquet files.

Bucket Policies

Bucket policies are JSON-based access control statements attached to the bucket. They define who can access which objects and under what conditions. Always deny public access by default and explicitly grant access to specific IAM principals.

// Example S3 Bucket Policy — allow read access from a specific IAM role only
{
  "Version": "2012-10-17",
  "Statement": [
    {
      "Sid": "AllowAppRoleRead",
      "Effect": "Allow",
      "Principal": {
        "AWS": "arn:aws:iam::123456789012:role/app-backend-role"
      },
      "Action": ["s3:GetObject", "s3:ListBucket"],
      "Resource": [
        "arn:aws:s3:::my-app-data-prod",
        "arn:aws:s3:::my-app-data-prod/*"
      ]
    }
  ]
}

Boto3 — Upload an Object with Metadata

# s3_upload.py — Upload a file with custom metadata and server-side encryption
import boto3

s3_client = boto3.client("s3", region_name="us-east-1")

# Upload with metadata and encryption
s3_client.upload_file(
    Filename="reports/monthly-sales-2026-03.csv",
    Bucket="my-app-data-prod",
    Key="reports/2026/03/monthly-sales.csv",
    ExtraArgs={
        "Metadata": {
            "uploaded-by": "data-pipeline-v2",
            "report-type": "monthly-sales",
            "fiscal-quarter": "Q1-2026",
        },
        "ServerSideEncryption": "aws:kms",
        "ContentType": "text/csv",
    },
)

print("Upload complete with KMS encryption and custom metadata.")

# Verify by reading back the object metadata
head = s3_client.head_object(
    Bucket="my-app-data-prod",
    Key="reports/2026/03/monthly-sales.csv",
)
print(f"Size: {head['ContentLength']} bytes")
print(f"Metadata: {head['Metadata']}")

Terraform — S3 Bucket with Encryption & Versioning

# terraform/s3.tf — Secure, versioned S3 bucket

resource "aws_s3_bucket" "data" {
  bucket = "my-app-data-prod"

  tags = {
    Environment = "production"
    ManagedBy   = "terraform"
  }
}

resource "aws_s3_bucket_versioning" "data" {
  bucket = aws_s3_bucket.data.id
  versioning_configuration {
    status = "Enabled"
  }
}

resource "aws_s3_bucket_server_side_encryption_configuration" "data" {
  bucket = aws_s3_bucket.data.id
  rule {
    apply_server_side_encryption_by_default {
      sse_algorithm = "aws:kms"
    }
    bucket_key_enabled = true
  }
}

# Block ALL public access — critical security control
resource "aws_s3_bucket_public_access_block" "data" {
  bucket                  = aws_s3_bucket.data.id
  block_public_acls       = true
  block_public_policy     = true
  ignore_public_acls      = true
  restrict_public_buckets = true
}

New S3 Capabilities (2024–2026)

Amazon DynamoDB

DynamoDB is a fully managed NoSQL key-value and document database. It delivers single-digit millisecond performance at any scale. The architecture is built on partitioning — understanding keys is essential for both performance and cost.

Key Design

Capacity Modes

1 WCU = 1 write/second for items up to 1 KB. 1 RCU = 1 strongly consistent read/second for items up to 4 KB (or 2 eventually consistent reads). Items larger than these thresholds consume more capacity units proportionally.

Terraform — DynamoDB Table

# terraform/dynamodb.tf — DynamoDB table with composite key

resource "aws_dynamodb_table" "orders" {
  name         = "orders-prod"
  billing_mode = "PAY_PER_REQUEST"  # On-Demand pricing
  hash_key     = "PK"
  range_key    = "SK"

  attribute {
    name = "PK"
    type = "S"
  }

  attribute {
    name = "SK"
    type = "S"
  }

  point_in_time_recovery {
    enabled = true
  }

  server_side_encryption {
    enabled = true
  }

  tags = {
    Environment = "production"
    ManagedBy   = "terraform"
  }
}

Zero-ETL Integrations (2025–2026)

DynamoDB now supports zero-ETL integrations that replicate your data to analytics services without building custom ETL pipelines. Data is available in near-real-time for SQL analysis, ML, and search.

Amazon RDS

Relational Database Service (RDS) manages relational databases — provisioning, patching, backups, and failover. Supported engines include PostgreSQL (up to v17.x), MySQL, MariaDB, Oracle, SQL Server, and Amazon Aurora (AWS's cloud-native engine). Aurora Serverless v2 can now scale down to 0 ACUs between requests for truly bursty workloads, making it the most cost-effective option for unpredictable database traffic.

Multi-AZ Deployments

Multi-AZ provisions a synchronous standby replica in a different Availability Zone. If the primary fails, RDS automatically fails over to the standby (typically within 60–120 seconds). This is the standard for production databases.

Terraform — RDS PostgreSQL with Multi-AZ

# terraform/rds.tf — Production RDS PostgreSQL

resource "aws_db_instance" "postgres" {
  identifier     = "app-db-prod"
  engine         = "postgres"
  engine_version = "17.4"  # PostgreSQL 17.x is current — always use a supported major version
  instance_class = "db.r7i.large"  # r7i is current-gen (Sapphire Rapids)

  allocated_storage     = 100
  max_allocated_storage = 500   # Auto-scaling up to 500 GB
  storage_type          = "gp3"
  storage_encrypted     = true

  db_name  = "appdb"
  username = "app_admin"
  # Password sourced from AWS Secrets Manager — never hardcode
  manage_master_user_password = true

  multi_az               = true   # High availability
  db_subnet_group_name   = aws_db_subnet_group.private.name
  vpc_security_group_ids = [aws_security_group.db_sg.id]

  backup_retention_period = 7
  deletion_protection     = true
  skip_final_snapshot     = false
  final_snapshot_identifier = "app-db-prod-final"

  tags = {
    Environment = "production"
    ManagedBy   = "terraform"
  }
}

Module 3: Networking & Security

Networking is the foundation of every AWS deployment. A misconfigured VPC, an overly permissive security group, or a missing IAM policy can expose your entire infrastructure. This module covers the core networking and identity building blocks.

Amazon VPC

A Virtual Private Cloud (VPC) is your isolated network within AWS. You define the IP address range (CIDR block), create subnets, attach internet gateways, and configure route tables. Every resource you launch lives inside a VPC.

Core Components

Public vs Private Subnets

Console Navigation

The "VPC and more" wizard creates a VPC with public/private subnets, route tables, NAT Gateway, and an Internet Gateway in one step.

Terraform — VPC with Public & Private Subnets

# terraform/vpc.tf — Production VPC layout

resource "aws_vpc" "main" {
  cidr_block           = "10.0.0.0/16"
  enable_dns_support   = true
  enable_dns_hostnames = true

  tags = { Name = "main-vpc" }
}

resource "aws_internet_gateway" "igw" {
  vpc_id = aws_vpc.main.id
  tags   = { Name = "main-igw" }
}

# Public subnet
resource "aws_subnet" "public" {
  vpc_id                  = aws_vpc.main.id
  cidr_block              = "10.0.1.0/24"
  availability_zone       = "us-east-1a"
  map_public_ip_on_launch = true

  tags = { Name = "public-subnet-1a" }
}

# Private subnet
resource "aws_subnet" "private" {
  vpc_id            = aws_vpc.main.id
  cidr_block        = "10.0.10.0/24"
  availability_zone = "us-east-1a"

  tags = { Name = "private-subnet-1a" }
}

# Route table — public (routes to Internet Gateway)
resource "aws_route_table" "public" {
  vpc_id = aws_vpc.main.id

  route {
    cidr_block = "0.0.0.0/0"
    gateway_id = aws_internet_gateway.igw.id
  }

  tags = { Name = "public-rt" }
}

resource "aws_route_table_association" "public" {
  subnet_id      = aws_subnet.public.id
  route_table_id = aws_route_table.public.id
}

# NAT Gateway for private subnet outbound access
resource "aws_eip" "nat" {
  domain = "vpc"
}

resource "aws_nat_gateway" "nat" {
  allocation_id = aws_eip.nat.id
  subnet_id     = aws_subnet.public.id  # NAT GW lives in the public subnet

  tags = { Name = "main-nat" }
}

resource "aws_route_table" "private" {
  vpc_id = aws_vpc.main.id

  route {
    cidr_block     = "0.0.0.0/0"
    nat_gateway_id = aws_nat_gateway.nat.id
  }

  tags = { Name = "private-rt" }
}

resource "aws_route_table_association" "private" {
  subnet_id      = aws_subnet.private.id
  route_table_id = aws_route_table.private.id
}

AWS IAM

Identity and Access Management (IAM) controls who can do what on which resources. It is the single most important AWS service. Every API call is authenticated and authorized through IAM. There is no cost for IAM — it is included with every AWS account.

Core Concepts

Policy Structure

// IAM Policy — least-privilege access to a specific S3 bucket
{
  "Version": "2012-10-17",
  "Statement": [
    {
      "Sid": "AllowS3ReadWrite",
      "Effect": "Allow",
      "Action": [
        "s3:GetObject",
        "s3:PutObject",
        "s3:ListBucket"
      ],
      "Resource": [
        "arn:aws:s3:::my-app-data-prod",
        "arn:aws:s3:::my-app-data-prod/*"
      ]
    },
    {
      "Sid": "DenyAllOtherS3",
      "Effect": "Deny",
      "Action": "s3:*",
      "NotResource": [
        "arn:aws:s3:::my-app-data-prod",
        "arn:aws:s3:::my-app-data-prod/*"
      ]
    }
  ]
}

Boto3 — Assume a Role Programmatically

# assume_role.py — Assume an IAM Role and use temporary credentials
import boto3

# STS client — used to assume roles
sts_client = boto3.client("sts", region_name="us-east-1")

# Assume the cross-account or service role
assumed = sts_client.assume_role(
    RoleArn="arn:aws:iam::987654321098:role/cross-account-data-reader",
    RoleSessionName="data-pipeline-session",
    DurationSeconds=3600,  # 1 hour max for this session
)

# Extract temporary credentials
creds = assumed["Credentials"]

# Create a new session with the assumed role's credentials
session = boto3.Session(
    aws_access_key_id=creds["AccessKeyId"],
    aws_secret_access_key=creds["SecretAccessKey"],
    aws_session_token=creds["SessionToken"],
)

# Use the session to access resources in the target account
s3 = session.client("s3")
objects = s3.list_objects_v2(
    Bucket="target-account-data-bucket",
    Prefix="exports/",
    MaxKeys=10,
)

for obj in objects.get("Contents", []):
    print(f"  {obj['Key']} — {obj['Size']} bytes")

print(f"Session expires: {creds['Expiration']}")

IAM Identity Center — New Features (2025–2026)

Security Groups vs NACLs

AWS provides two layers of network filtering. Understanding the difference between stateful and stateless processing is critical for designing secure architectures.

Terraform — Security Group Example

# terraform/security_group.tf — Web server security group

resource "aws_security_group" "web_sg" {
  name        = "web-server-sg"
  description = "Allow HTTPS inbound and all outbound"
  vpc_id      = aws_vpc.main.id

  # Inbound — HTTPS only
  ingress {
    description = "HTTPS from anywhere"
    from_port   = 443
    to_port     = 443
    protocol    = "tcp"
    cidr_blocks = ["0.0.0.0/0"]
  }

  # Outbound — all traffic
  egress {
    from_port   = 0
    to_port     = 0
    protocol    = "-1"
    cidr_blocks = ["0.0.0.0/0"]
  }

  tags = { Name = "web-server-sg" }
}

# Database SG — only accepts traffic from the web tier
resource "aws_security_group" "db_sg" {
  name        = "database-sg"
  description = "PostgreSQL from web tier only"
  vpc_id      = aws_vpc.main.id

  ingress {
    description     = "PostgreSQL from web servers"
    from_port       = 5432
    to_port         = 5432
    protocol        = "tcp"
    security_groups = [aws_security_group.web_sg.id]  # Reference by SG, not CIDR
  }

  egress {
    from_port   = 0
    to_port     = 0
    protocol    = "-1"
    cidr_blocks = ["0.0.0.0/0"]
  }

  tags = { Name = "database-sg" }
}

Module 4: Pricing & Cost Optimization

AWS bills by the second, by the byte, and by the API call. Without active cost management, a development account can easily reach $1,000+/month from forgotten resources. This module covers the three essential tools for cost visibility and control.

AWS Pricing Calculator

The AWS Pricing Calculator (calculator.aws) lets you model complex multi-service architectures before deploying. You add each service, configure its parameters (instance type, storage, requests/month), and get a monthly/annual estimate.

How to Estimate a Typical Architecture

Real-World Example Estimate

Cost Explorer

Cost Explorer is your post-deployment cost analysis tool. It visualizes spending trends, breaks down costs by service/region/tag, and identifies anomalies. Enable it from the Billing Dashboard — it takes 24 hours to populate historical data.

Finding Hidden Costs

The most common "surprise" line items in AWS bills:

Console Navigation

AWS Budgets

AWS Budgets lets you set custom spending thresholds and receive alerts via email or SNS when actual or forecasted costs exceed your budget. This is the simplest and most effective way to prevent unexpected bills.

Setting Up a Budget

Recommended Alert Thresholds

Terraform — Budget with Alerts

# terraform/budgets.tf — Monthly budget with email alerts

resource "aws_budgets_budget" "monthly" {
  name         = "monthly-account-budget"
  budget_type  = "COST"
  limit_amount = "500"
  limit_unit   = "USD"
  time_unit    = "MONTHLY"

  # Alert at 80% of actual spend
  notification {
    comparison_operator       = "GREATER_THAN"
    threshold                 = 80
    threshold_type            = "PERCENTAGE"
    notification_type         = "ACTUAL"
    subscriber_email_addresses = ["cloud-team@example.com"]
  }

  # Alert when forecast exceeds budget
  notification {
    comparison_operator       = "GREATER_THAN"
    threshold                 = 100
    threshold_type            = "PERCENTAGE"
    notification_type         = "FORECASTED"
    subscriber_email_addresses = ["cloud-team@example.com", "finance@example.com"]
  }
}

Module 5: Common Pitfalls & Security Risks

These three patterns account for the majority of AWS security incidents and cost overruns. Understanding them is more valuable than memorizing individual service features.

Pitfall #1: Public S3 Buckets

Publicly accessible S3 buckets are the #1 cause of cloud data breaches. Misconfigured bucket policies or legacy ACLs can expose customer data, credentials, database backups, and intellectual property to anyone on the internet.

How It Happens

• Using "Principal": "*" in a bucket policy without understanding it grants access to the entire internet
• Legacy ACLs like public-read or public-read-write from before S3 Block Public Access existed
• Granting public access "temporarily" for testing and forgetting to revoke it
• Static website hosting on S3 where the data bucket is confused with the website bucket

Console Check

# terraform/s3_account_block.tf — Account-level public access block

resource "aws_s3_account_public_access_block" "account" {
  block_public_acls       = true
  block_public_policy     = true
  ignore_public_acls      = true
  restrict_public_buckets = true
}

Pitfall #2: Over-Provisioning

Developers and architects consistently choose instances that are 2–4× larger than needed. This is the most common and most expensive mistake in cloud computing — often costing organizations thousands per month in wasted compute.

Why It Happens

• "Just to be safe" — choosing m5.2xlarge when m5.large would suffice
• Running production-grade instances for development environments 24/7
• Not monitoring CPU/memory utilization after deployment
• Provisioned capacity on DynamoDB or RDS far exceeding actual peak load

How to Fix It

Pitfall #3: Hardcoded Credentials

Embedding AWS Access Key IDs and Secret Access Keys directly in source code, config files, or environment variables on EC2 instances is a severe security anti-pattern. Leaked credentials are the fastest path to a compromised AWS account.

Common Anti-Patterns

# ❌ NEVER DO THIS — hardcoded credentials in application code
import boto3

# These credentials will end up in Git history, CI logs, and error reports
client = boto3.client(
    "s3",
    aws_access_key_id="AKIAIOSFODNN7EXAMPLE",        # ❌ NEVER
    aws_secret_access_key="wJalrXUtnFEMI/K7MDENG/bPxR...",  # ❌ NEVER
)

The Correct Approach: IAM Roles

# ✅ CORRECT — Boto3 automatically uses IAM Role credentials
import boto3

# When running on EC2, Lambda, or ECS, boto3 automatically discovers
# temporary credentials from the instance metadata service (IMDS)
# or the ECS task role. No credentials needed in code.
client = boto3.client("s3", region_name="us-east-1")

# This "just works" because the EC2 instance / Lambda function
# has an IAM Role attached with the necessary S3 permissions
response = client.list_objects_v2(Bucket="my-app-data-prod")

How IAM Roles Work for Services

Prevention: Use AWS Secrets Manager

For secrets that cannot be replaced by IAM Roles (third-party API keys, database passwords for non-RDS databases), use AWS Secrets Manager to store and rotate them.

# retrieve_secret.py — Fetch a secret from AWS Secrets Manager
import json
import boto3

# Uses IAM Role credentials — no hardcoded keys needed
secrets_client = boto3.client("secretsmanager", region_name="us-east-1")

response = secrets_client.get_secret_value(
    SecretId="prod/myapp/db-credentials"
)

secret = json.loads(response["SecretString"])
db_host = secret["host"]
db_user = secret["username"]
db_pass = secret["password"]

print(f"Connecting to {db_host} as {db_user}")