Amazon has reported impressive revenue growth, surpassing analysts' expectations, driven by significant increases in its cloud and artificial intelligence divisions. The company's overall revenue increased by 20 percent to over $200 billion in the second quarter, with its cloud business, Amazon Web Services (AWS), jumping 37 percent to reach $42.2 billion. Additionally, Amazon's AI-related divisions, including AI cloud and chips businesses, grew by triple-digit percentages, each exceeding $25 billion in annual revenue run rates.
AWS Booming
During a call with analysts, Amazon CEO Andy Jassy highlighted that AWS is "booming" and could potentially become a trillion-dollar annual revenue business in the future. AWS offers customers access to dozens of AI models from various developers, including those from OpenAI and Anthropic. Some AWS customers are using the service to build their own foundation models, leveraging proprietary data.
Heavy Investments in AI
Amazon, along with other tech giants like Microsoft, Alphabet, and Meta, is heavily investing in AI data centers, chips, and computing infrastructure. This year, these companies are collectively expected to invest around $700 billion in AI. Amazon increased its estimate for capital expenditures in 2026 to $220 billion, up from its previous estimate of $200 billion.
Market Reactions
Following the announcement, Amazon's stock jumped by more than 7 percent after hours. In comparison, Microsoft's stock soared over 15 percent after it reported strong results, while Meta's shares dropped as much as 12 percent during after-hours trading due to disappointing results.
