Amazon reported a massive second-quarter performance, with net income soaring to $62.6 billion, largely thanks to a $53.4 billion pre-tax gain from its investment in AI lab Anthropic. Earnings per diluted share reached $5.75, far surpassing the $1.82 expected by Wall Street, though the windfall makes direct comparisons difficult. The stock jumped more than 10% in after-hours trading.
Revenue climbed 20% year-over-year to $200.61 billion, beating analyst estimates. The standout was Amazon Web Services (AWS), which generated $42.2 billion—37% higher than a year earlier and above forecasts. AWS operating profit rose to $16.6 billion from $10.2 billion. CEO Andy Jassy highlighted that AWS’s AI and custom chip businesses each exceeded a $25 billion annual run rate, with triple-digit growth.
Amazon’s AI strategy goes beyond renting cloud servers. Its custom Trainium chips secured multi-year commitments from Anthropic and OpenAI, while Graviton5 processors—now widely available—offer up to 40% better price-performance. Nearly all top AWS customers use Graviton. The Bedrock AI platform added models from OpenAI, Anthropic, Google DeepMind, and xAI, and customer spending in the quarter surpassed all previous quarters combined.
Capital expenditure forecasts were raised to $220 billion for 2026, up from $200 billion, yet Jassy warned that demand still exceeds capacity, hinting at tight supply through 2028. While free cash flow turned negative due to heavy infrastructure spending, operating cash flow rose 33% to $161.4 billion. The market’s reaction underscores a preference for cloud infrastructure providers over AI labs, though the sustainability of this spending cycle remains an open question.
