London
21 °C
Manchester
13 °C
Glasgow
20 °C
Dublin
16 °C
Belfast
Washington
28 °C
Denver
Atlanta
33 °C
Dallas
39 °C
Houston Texas
New Orleans
El Paso
Phoenix
Los Angeles
34 °C
8 °C
Amazon beats expectations with cloud and AI growth / Photo: © AFP
Amazon beats expectations with cloud and AI growth
Amazon beat analysts' expectations on Thursday when it reported growth in overall revenue and sales, particularly in its cloud, artificial intelligence and chips divisions.
Its revenue increased 20 percent to more than $200 billion in the second quarter, compared to last year, with its cloud business, Amazon Web Services, jumping 37 percent to reach $42.2 billion.
The company meanwhile said that two of its AI-related divisions grew by "triple-digit percentages" -- its AI cloud and chips businesses each "exceeded" $25 billion annual revenue run rates, a measure of recurring sales.
Amazon stock jumped by more than 7 percent after hours.
The company is working to show that its heavy investments in artificial intelligence, alongside the rest of the tech sector, are paying off.
AWS is "booming," Amazon CEO Andy Jassy said during a call with analysts Thursday afternoon.
He added that the company believes AWS alone could "very possibly be a trillion-dollar annual revenue business for us in time."
The company has developed its own AI models, known as Nova, though a recent report from Business Insider said the company is winding down that work.
"AWS and Amazon can have a wildly successful business without its own frontier model," Jassy said on Thursday, but he denied it was abandoning the effort. "We are pursuing our own frontier model."
It also offers customers access to dozens of other models from developers, including those from OpenAI, which makes ChatGPT, and Anthropic, which makes Claude.
Some AWS customers are even using the service "to build their own foundation models," which are "smaller models that leverage their proprietary data," rather than using bigger AI models from other competitors, Jassy said.
Amazon has made investments and signed partnerships worth billions with both OpenAI and Anthropic.
-Spending billions -
Amazon, Microsoft, Alphabet and Meta are collectively on track to pour around $700 billion into AI data centers, chips and computing infrastructure this year.
On Thursday, Amazon increased its estimate for capital expenditures in 2026.
It now expects to spend $220 billion this year, up from its previous estimate of $200 billion, Jassy said.
On Wednesday, Microsoft adjusted its forecast for total spending in the 2026 calendar year to $175 billion, down from $190 billion previously.
The maker of LinkedIn and Xbox likewise showed growth in revenue and profits, and said that its AI-powered business productivity tool, called Copilot, grew to over 30 million paid users.
Microsoft shares soared over 15 percent on Thursday after reporting results on Wednesday that beat expectations.
Meta meanwhile raised its spending estimate to as much as $145 billion this year, nearly double what it spent in 2025, when it reported its results on Wednesday.
The maker of Facebook, Instagram and WhatsApp reaffirmed that it would keep spending heavily on the data centers and chips underpinning its AI effort.
Meta's shares dropped as much as 12 percent during after-hours trading on Wednesday after it reported disappointing results, and closed down another 8 percent on Thursday.
Last week, Alphabet increased its capital expenditure estimate for the full year to as much as $205 billion, a jump from its previous estimate of $190 billion that CFO Anat Ashkenazi said was driven by AI investments.
B.Turner--SFF
