My rule of thumb is that you need peaks shorter than ~6 hours for most "normal" type setups before AWS becomes viable from a cost perspective. Of course that depends on how significant the peaks are. Most consumer websites with an international audience for example, rarely have significant enough peaks.

This is exacerbated because the alternative is not either-or - the most cost effective system is often dedicated hosting + the ability to spin up cloud instances to take the peaks.

Doing so lets you provision your dedicated servers to run at much higher utilization most of the time, and make pure cloud setups look far more expensive, and most people with setups like that end up needing the cloud instances very rarely.

That's not to say there aren't exceptions with genuinely massive peaks, but even then it doesn't take a huge base load before a hybrid system starts to have the potential to bring substantial savings.