Amazon.com beat market expectations for quarterly cloud sales growth Thursday, calming prior investor fears over the company's hefty planned outlays for artificial intelligence development. Shares in the Seattle-based online retailer jumped as much as 9% in after-hours trading, following a nearly 4% rise during the regular trading session.
The Numbers
Revenue at Amazon Web Services, the company's cloud computing unit, jumped 37% to $42.2 billion in the second quarter ended June 30, comfortably beating analysts' consensus estimate of a 31.21% increase, according to data compiled by LSEG. Overall company revenue came in at $200.6 billion for the quarter, topping analysts' estimates of $196.16 billion, with earnings per share of $5.75 — though that figure wasn't directly comparable to consensus estimates given it included a large one-time investment gain.
CEO Jassy's Framing
"AWS is booming," CEO Andy Jassy said in a statement, noting it marked the unit's fastest growth in 18 quarters. He added that "our AI and chips businesses each eclipsed run rates of more than $25 billion" during the quarter, while advertising revenue grew 26% and Prime delivery speeds reached record levels in the first half of the year.
The Free Cash Flow Trade-Off
The strong growth came with a notable cost: Amazon's free cash flow turned sharply negative in the period. The company burned $7.6 billion of cash on a trailing 12-month basis in the second quarter, compared to $18.2 billion in free cash flow a year earlier. Amazon wasn't alone in that trade-off — other Big Tech competitors including Microsoft, Alphabet, and Meta also reported significant drops in free cash flow as they ramp up AI-related spending.
Putting Market Share Fears "to Bed"
The results directly addressed a persistent investor concern: whether AWS was losing ground to faster-growing rivals Microsoft Azure and Google Cloud. "There were concerns about market share losses on AWS, but that's been put to bed now," said Dan Morgan, portfolio manager at Synovus Trust. "It just gives more evidence that AWS's lead is still intact." The strong showing mirrors similarly solid cloud results from both Microsoft and Alphabet, which also comfortably beat Wall Street estimates for cloud revenue in the same reporting period.
The Broader AI Spending Context
Amazon's results land amid intense scrutiny of Big Tech's collective AI capital expenditure, which is set to exceed $700 billion this year across the industry — spending that has strained cash flows at traditionally cash-rich companies and sparked concerns some may be overbuilding capacity. Companies have consistently argued the outlays are necessary to ease capacity constraints preventing them from fully meeting AI-driven demand, pointing to ballooning contract backlogs as evidence of unmet need rather than overbuilding. AWS has benefited from a growing roster of partnerships this year, including major cloud infrastructure and chip supply deals with OpenAI, Anthropic, Meta, Pinterest, and Snowflake.
Beyond the Cloud: E-Commerce and Prime Day
In its core e-commerce business, Amazon has continued rolling out faster delivery services globally and expanding into more rural areas of the U.S. to draw additional shoppers. The quarter also included Amazon's annual Prime Day event, running June 23 through June 26, with Adobe Analytics estimating total spending across the shopping event at more than $26.4 billion.
What's Next
With AWS's AI and custom chip businesses each now running above $25 billion annually and analysts expecting Amazon to sustain that growth as more data center capacity comes online over the coming months, investor attention will likely turn to whether the company's negative free cash flow trend stabilizes — and whether AWS can maintain its "fastest growth in 18 quarters" pace against continued competition from Microsoft and Google.