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Yes SQS is often used in front of a "worker tier" like this, with instances in an EC2 Autoscaling Group that has scaling policies driven by a queue depth metric, or possibly application-specific custom metrics you generate from the worker nodes if that could provide better information for scaling. API Gateway can interface with SQS.
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As a side note, you'll probably want to look into Attribute Based Selection for giving the ASG a list of multiple instance types to try and launch to have better chances at having capacity available for very large bursts, especially if you're using spot: https://docs.aws.amazon.com/autoscaling/ec2/userguide/create-asg-instance-type-requirements.html