Shares of Amazon surged 12.3% to $264.43 in pre-market trading after the company posted Q2 results that blew past expectations on nearly every measure, led by a cloud business growing at a pace nobody predicted. The question now: whether this growth justifies what may be the largest corporate spending spree in history.
AWS Grew at Its Fastest Clip in Four Years, Crushing Forecasts
AWS sales expanded 37% year over year, trouncing analysts' expectations for 31% growth and representing the unit's fastest expansion since 2021.
The division generated $42.23 billion in revenue; analysts had been looking for $40.54 billion.
AWS collected $16.62 billion in Q2 operating income, well above the $13.62 billion consensus.
Nearly 61% of Amazon's overall operating profit now comes from AWS — meaning this one division is effectively setting the stock's trajectory.
AI and Custom Chips Are No Longer Side Projects
AWS's artificial intelligence business and its custom chips unit each brought in over $25 billion in annualized revenue, more than doubling from last year.
Amazon is making those investments based in part on demand from big AI companies including OpenAI and Anthropic, which have signed commitments worth $138 billion and more than $100 billion, respectively. CEO Andy Jassy went further, predicting AWS could eventually become "a trillion dollar annual revenue business" due to "striking" demand.
The Price Tag Is Staggering — and Free Cash Flow Has Gone Negative
Jassy said the company expects capital spending to reach $220 billion this year , up from an earlier $200 billion plan. Free cash flow on a trailing 12-month basis swung to an outflow of $7.6 billion from an inflow of $18.2 billion in the prior year. Investors are, for the moment, overlooking the cash burn because the growth rates suggest Amazon is converting spending into revenue faster than peers. Jassy warned the company will still not have enough capacity to meet AI demand in 2026 or 2027.
The Broader Picture: A Beat Everywhere, With One Asterisk
Total net sales reached $200.6 billion, up 20% , and operating income rose 43% to $27.5 billion.
However, Q3 revenue guidance of $197–$202 billion implies a sequential deceleration , partly because Prime Day shifted into Q2 this year. Investors willing to look past a single soft guide are betting that AI infrastructure demand — not retail — is the real engine. The stock's move says the market agrees, for now.