Amazon reported strong second-quarter results, exceeding market expectations, driven by robust growth in its cloud business. Despite a shift to negative free cash flow due to significant investments in artificial intelligence (AI), shares of Amazon Web Services (AWS) surged nearly 8% in after-hours trading.
On July 30, Amazon announced that its second-quarter revenue reached $200.6 billion, a 20% increase from the same period last year, surpassing market estimates of approximately $196.5 billion. Operating income also rose by 43% to $27.5 billion.
The growth was led by AWS, which reported revenue of $42.2 billion, marking a 36.7% increase year-over-year. This is the highest growth rate in 18 quarters, significantly exceeding the market's expectation of around 31%.
Amazon CEO Andy Jassy stated, "The annual revenue run rate for our AI and semiconductor-related businesses has also surpassed $25 billion each."
Net income reached approximately $62.6 billion, more than triple the $18.2 billion reported in the same quarter last year. However, this surge in net income was largely influenced by a pre-tax valuation gain of $53.4 billion from investments, including Anthropic. Earnings per share (EPS) stood at $5.75, well above the market forecast of $1.82.
Amazon also announced plans to increase its AI investments, raising its capital expenditure forecast for the year from $200 billion to $220 billion, aimed at expanding infrastructure for data centers, AI servers, and semiconductors.
However, the large-scale investments have negatively impacted cash flow. Over the past 12 months, free cash flow turned from a $18.2 billion profit to a $7.6 billion loss.
Jassy noted, "Even with a $220 billion investment, it will be challenging to secure enough capacity to meet this year's demand," predicting that supply shortages will continue into 2027.
Looking ahead, Amazon's third-quarter revenue outlook fell short of market expectations, with projections between $197 billion and $202 billion, lower than the anticipated $204 billion.
Despite this, investors remained focused on AWS's strong growth. Amazon's stock rose 3.9% during regular trading and increased by about 8% in after-hours trading following the earnings announcement.
* This article has been translated by AI.
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