Scalability is largely a design exercise, not, as much as AWS sales engineers want your CTO/CFO to believe, an infrastructure exercise. At the point where infrastructure becomes an issue, you're building your own AWS.
I'm happy to admit that AWS might make some of this easier, but it's almost certainly going to be more expensive [1], and it's often at the cost of flexibility (lock-in, AWS-specific knowledge).
How are dedicated servers, or even collocated servers, possibly less flexible?
[1] There are exceptions, S3 and Route53 stand out as, at the very least, being cost-competitive to a greater extent than other AWS/Cloud offerings.